By Gerri Detweiler –

Credit scores are often seen as the number one obstacle that prevent small businesses from getting financing. But disorganized financials may be equally to blame.

In today’s challenging economic environment in particular, lenders want to make sure your business is viable and will be able to repay the debt. Organized and up to date finances are essential if you want to increase your chances of getting approved. Here are 5 simple ways to organize your business finances. Click To Tweet

1. Create an Easy Filing System

“We think ignorance is bliss, but really is it filled with headaches and fear,” says Belinda Rosenblum, CPA, money strategist for business owners, and founder of OwnYourMoney.com. “Avoiding your paperwork and bills — or even a huge ‘to file pile’ — is a costly recipe for disaster,” she says. “Not opening bills often causes missed deadlines or even late fees. Opening them but then letting them pile up without filing anything can cause you to feel disorganized and out of control.”

Rosenblum suggests you schedule a short block of time each week — “for example, on a Money Monday or Finances Friday.” Then “set the timer on your phone (start with 30 minutes) and focus on getting through a certain stack of paperwork.” For a simple filing system she recommends file folders for each month of the year. “Then file the paperwork based on the invoice dates for consistency. You’ll need a few other folders for items such as taxes, charitable contributions, and health insurance paperwork,” she adds.

2. Stop Mixing Personal and Business Finances

If you don’t have a business bank account, don’t put this task off any longer. (If you’re worried about the cost of a separate account, you can get a free business checking account.) Make sure to use your business account only to pay business expenses. If you need funds to pay personal expenses, pay yourself via payroll and/or owner’s draw and then use your personal funds to pay personal expenses.

While you are at it, consider using a dedicated credit card for business expenses. A small business credit card can be an excellent choice. Some business credit cards don’t report to personal credit unless you default. And most offer attractive rewards.

“Even if you do not have a business credit card, designate one of your personal cards for business expenses,” advises Sandy Smith, founder founder of the Elevate Influencer Conference. “This will make it easier to track and manage those costs. If that credit card also rewards you with mileage, cash back, or any other gift for using the card, this is an added perk that you can use for yourself as well.”

Commingling personal and business funds in your business account can jeopardize the legal protection your business structure offers. Tax time is more complicated when you don’t use separate accounts. And using personal accounts for your business can definitely make it more difficult to get financing, as many lenders want to verify business revenues.

3. Plan for Expenses

You need to make sure you set aside funds to pay annual bills as well. If you don’t plan for those expenses, you may run out of money. Sylvia Inks, Business & Financial Coach at SMI Financial Coaching, LLC and author of the Small Business Finance Book for the Busy Entrepreneur, suggests you calculate the total financial obligations for annual bills and divide by twelve. “Then, set up automatic savings to transfer this average monthly amount from your operating expense bank account to your long-term savings bank account,” she recommends. “As yearly bills come due, you’ll have the cash ready to pay them.”

Forecasting your business’s financial needs, and then planning for them, is key. Many business owners outsource to finance freelancers to help with some of the more complicated planning. Software tools and websites can also help.

4. Automate It

Set up auto-pay for bills so you don’t forget to pay them. You’ll save money on late fees and interest charges. As an added bonus, this strategy can help you build and protect your business credit, since business credit reports can include payments that are just a day late.

Consider using your credit card to make those payments, and you can earn rewards. Just make it a point to pay on time to avoid interest charges.

5. Tailor Your Financial Reports

Financial reports can also play a crucial role in getting approved for financing. Traditional lenders may want to see profit and loss statements, balances sheets or other financial statements, for example. Others may analyze business revenues.

But don’t create financial reports just for lenders — use them to gain valuable insights into your own business finances. Consider creating your own “custom report” in your bookkeeping system, suggests Rosenblum. “You can choose preferences once — like not showing the pennies or comparing to past periods — and then simply choose that same report to run every month,” she explains. “Each month, instead of wondering where all the money went, you will be more likely to actually run the report and spend time analyzing the numbers and making conscious money making moves.”

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About the Author: Credit expert Gerri Detweiler is Education Director for Nav. She has more than three decades of experience in consumer credit education, has been interviewed in more than 3500 news stories, and answered over 10,000 credit questions online. Her articles have been widely syndicated on sites such as MSN, Forbes, and MarketWatch. She is the author or coauthor of five books, including Finance Your Own Business: Get on the Financing Fast Track. She has testified before Congress on consumer credit legislation.

This article originally appeared on Nav.com.