Spring clean for better business finance
Has the dust been building up on your small business finances? Do you struggle to understand where you stand financially? Then it is time for a financial spring clean. By reviewing your finances, you will be able to save money, reassess your payment plan and set new goals for your business. Here are five easy ways to get your finances sparkling.
Reassess paid subscriptions and recurring costs
Unused subscriptions and recurring costs could be sapping your business of much needed money which you can use to grow. Therefore, it is important to review your payments and cancel those which you do not require any more. Here are some questions you can ask yourself when you go through the monthly costs you pay.
- Did the expense create any leads, customers or revenue in the last three months?
- Do you require the expense to run your business i.e. rent, utilities etc.?
- Is this expense important to deliver your product or service to your client?
- Is the expense still in the trial phase?
If you answer yes to any of the questions, then you can cross it off. The ones which you have not been crossed off should be cancelled.
Check outstanding invoices from customers
Print out an accounts receivable aging table. This document will show which accounts are overdue. Depending on your payment plan for your invoices, it is important to follow up on the accounts which are long overdue. You can call your customers and request that they make payments as soon as possible. For accounts which are overdue by 90 days, it may be hard to get the money back. You may need to employ the help of a debt collector. If you have customers who are regular bad payers, then you may have to renegotiate their payment plan. In addition, you could rethink your overall payment plan and change it for all customers, new and old.
Re-evaluate your pricing strategy
With the constant changes in business and in the financial environment of countries, it is a good idea to review your pricing strategy. Make sure that you are still making a profit from the sale of your goods. Compare your prices with competitors in your industry to make sure you are competitively positioned. You do not want to be over-priced or worse yet under-priced. By re-evaluating your pricing strategy, you can assure that you are priced right for your product or service.
Review your cash flow
Take a look at your cash flow and check if you will have enough money to survive during the lean times. If you think you may struggle in the future, it may be a good time to pay a visit to your banker. He will be able to advise you on the various business credit options available and which will be the best fit for your business.
Pay off debt
Check all the invoices which you have outstanding from suppliers. Should you have some which need to be paid before the debt collector comes to visit then it would be good idea to pay it. You do not want to blemish your credit record for a few small unpaid invoices. If you are not able to pay the outstanding invoice, then you should contact your supplier and set up a payment plan to ensure you settle your debt. By being punctual with your debt and contacting your supplier you will be able to build rapport which will help in the future when you may need your supplier’s help urgently.
By following the above ways, you will be well on your way to having sparkling accounts. Remember it may take some time but it will be an investment into the growth and success of your business.
• This article was originally published in the NSBC.