Useful Financial Clean-Ups for Your Company

Useful Financial Clean-Ups for Your Company

Running a business can be quite stressful. This is especially true if you happen to experience financial troubles. From late payments to slow periods, here are some ways how you can clean up for financial situation.

Separate business finances from personal ones

In order to be able to see how well your company is doing, you need to keep your personal accounts separate from your business ones. This is something that a lot of people forget to do and they don’t realize how much easier it is to assess their company’s progress by doing so.

So, if you use the same account for your business and personal needs, it’s time to separate them. Get different savings and checking accounts for your company, as well as a business credit card.

In case you already keep these funds apart, make sure not to use your business account for your personal needs. This can make filing your taxes difficult. Moreover, if the situation arises where it’s necessary to use one fund for the other purpose, make sure to record an accounting transaction.

Keep up with your books

If you are your own accountant, you need to make sure you dedicate enough time to your books. Set aside five to ten minutes every day to review and organize all receipts, spending, invoices and statements from the day. This will let you see what is going on in your company and help you find ways to be better organized.

Additionally, don’t overlook accounting software that can help you keep everything in order. There are plenty of bookkeeping apps you can turn to. Also, it’s best to keep a digital copy of everything so that you always know where things are and not have to go through piles of papers.

On the other hand, it might be best to have a professional accountant to deal with your records. Experts are more likely to find some deductions that you overlooked. They have experience when it comes to bookkeeping and doing taxes so this is probably the best way to save yourself the headache as well as money and time.

Reassess your prices

Now that you’ve gone through your books, you can see whether your business is making a profit. Deduct your expenses from your income to see whether there is enough money to run the business. Is the profit in accordance with your expectations? This might be a good time to reassess your company’s prices.

In case your prices are too high, people might not want to buy from you. If they are too low, you will end up with an unhealthy bottom line. That is why you need to know how to price a product in order to make a profit.

Take a look at the market and see how your competition is doing and how much they are charging. You can even ask your consumers to see how much they would be willing to pay for certain products or services.

Avoid unnecessary costs

Another plus of keeping up with your books is that it can tell you exactly where you are leaking money. Take a look at all your monthly expenses. Are there any unnecessary costs that you keep paying month after month?

The best approach here is to cut them out. For example, if you spend money on renting equipment that no one in the office uses, get rid of it. The same goes for subscriptions and software that you don’t use.

Moreover, look for some cheaper deals for the things that you do need and use every day. For instance, maybe some other company offers less expensive business insurance with better benefits. Another thing to consider is buying in bulk. Some supplies that you constantly need might be cheaper when purchased in bulk. Just make sure you have enough storage for everything and don’t overstock your inventory.

Renegotiate payment terms

While checking your books, you may have noticed that some expenses are too high to pay at once. Try to renegotiate some terms and conditions with your suppliers and vendors. In order to avoid being overdue, ask them whether they would be willing to let you pay things off in installments. Explain to them that a payment plan would be the best option for you; just keep in mind that you might need to pay interest then.

The same goes for any loans. If you took out a loan to open your business and are still paying it off, check with your bank whether there are any different payment systems. Talk to them to see whether refinancing or consolidating would be a good option.

Make sure you get paid

This might sound silly, but many business owners forget or don’t know how to properly track customer payments and invoices. You should check your records regularly so that you know whether there are any outstanding invoices. This way, you can also see if there are any problematic customers that keep paying you late.

Make sure you explain to them your policy when it comes to late payments. Provide them with your terms and conditions when they make a purchase. You can send them payment reminders so that they don’t forget the due date.

Manage cash flow

In case you do find yourself in a bit of a situation because of late payments, there are still things you can do. Cash flow is crucial for your business’s operation so make sure you track down all late payers. If you’re in a pinch and can’t wait for the payment, you can opt for invoice factoring as it can give you early access to the money.

Your books might suggest that there is a certain period during which you always experience cash flow problems. Getting working capital loans might be worth your consideration then, as they can help you cover your payroll, accounts payable and other daily operational costs.

Another thing to keep in mind is short-term business loans, as they can be approved in a single day. However, the interest rates for these types of loans are usually higher than those on long-term loans.

It’s normal that you want to oversee everything that happens in your company; just don’t spread yourself too thin so that you forget about your finances. Having an accountant can make your job much easier and help avoid major errors. However, if you are determined to do it on your own, follow these tips and you shouldn’t have any problems.

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