Have you ever wondered what an accountant might recommend that you do differently in your business? Below are a few tips that will save your business time and money. You may be surprised that most of these have nothing to do with bookkeeping or data entry, but instead provide financial knowledge and practices that can help you avoid major money pitfalls, and build more wealth in your business.
Evaluate your prices at least once a year.
Don't go more than 2 years without an increase. This can be a challenge - especially when times are tough - but you need to compensate for the other costs of doing business that are rising.
Bill on time.
Invoice immediately upon sale of product or delivery of service. Too many businesses get caught over-extending credit to customers and experiencing defaults or disputes simply because collection was late.
Send bills electronically.
Not only will this practice save you postage and handling time, but you may get paid earlier than regular mail.
Employee fraud is easier to commit in small business. Whether it's supplies pilferage or overstating expense reimbursements, scrutinize timecards, separate check-writing duties from billing and deposits and bank reconciliations. To deter or avoid temptation, make sure employees know you're looking.
Cross-train everyone in an accounting capacity.
Don't leave aspects of your business reliant on one specific individual. You will experience turnover. By cross-training you gain continuity.
Markup all pass-through costs.
If you purchase items on behalf of your customers, you need to markup these costs at least 20% in order to cover your overhead (handling, installation, B&O tax, billing, cost of using your capital) and add value. Construction businesses often markup 50% to accommodate for extra payroll for management and schedule delays.
Don't let money go stale.
Transfer idle cash balances to a savings or CD account so it earns interest. Look into sweep accounts.
Review balance sheet and P&L monthly.
Will you hang around after new leadership takes over? Will you continue to draw a salary? What will your compensation package look like? The answers to each of these questions will have a direct impact on future operations, so take time to define your role now.
Don't let money go stale.
This may sound basic, but it's often overlooked for months. Run the reports and drill down to investigate balances. Look for changes in sales and variances to budgets. Identify trends and measure against those.
Protect and grow your hard-earned business investment. Contact us for a consultation for a business analysis at 206-522-0110 or