5 Business Cash Leaks to Eliminate in 2015
What’s your New Year’s resolution? How about spending smart and saving money? As your business keeps growing, it becomes more and more difficult to stay on top of the cash flow. Actually, it’s not even cash—the money comes in and out of your bank accounts without any physical contact with your pockets. Software like QuickBooks helps tremendously, but all it does is aggregate and organize the information. There needs to be a human eye checking statements regularly to ensure you are not overpaying for things you don’t need.
Before the year ends, go though your financial records and accounts payable to check for any of these money-draining services that are slowly emptying your bank accounts. Or enlist the help of a professional Maryland bookkeeper to help you plug these cash leaks.
There are hundreds of industry-specific and local organizations these days. And there are many benefits of joining, from prestige, access to events and training to link exchange and marketing help. These memberships, however, often come with outrageous fees that don’t justify the benefits you get. In some cases, they lure you in with special offers, then quietly raise the fee without you realizing it. Take a look at the list of your memberships and cancel those that don’t offer any value, you don’t use or are not relevant to your business anymore.
Many software developers have adopted the monthly payment plan system that uses auto-renewals. Some of them are kind enough to send an email reminder before the payment leaves your bank account, while others withdraw it quietly. Check your bank statement for any charges for tools or software you signed up for. Maybe you forgot to cancel a trial period, or maybe your new computers came with three years of free anti-virus, so you can cancel your old subscription.
A tip: create a spreadsheet that lists all your software, fees, terms of renewal and expiration dates. This way nothing will come as a surprise.
Even the most reasonable banks have a set of fees for business accounts. Some of these fees can be avoided or minimized by keeping track of and following the bank’s terms. For example, in many cases maintaining a minimal balance will save you from the monthly account fee. Do a quick comparison with other banks in your area to check if the fees you are paying are competitive. It might be worth moving your money to a more efficient bank that doesn’t have to charge you as much for simple operations.
A tip: don’t throw away those letters from your bank. If you open and read all bank mail, you may see a timely notice about increase of fees or new limits for your account.
When you don’t get paid timely for the job you’ve completed, this takes away resources from your other projects and messes up your budget. And if 60 percent of your customers don’t pay on time, your business may slip into a financial starvation. If this is the case, it’s clear that the way you deal with non-paying accounts is not effective. Consider reviewing your invoicing procedures, collecting deposits or being more aggressive with demanding payment.
A tip: reduce your “due by” date to make sure the invoice goes into the processing pile as it is received, instead of sitting around til the next paying cycle.
Did you move to a bigger office with an expectation of a growth spurt that didn’t happen? Or maybe the people who helped you outgrow your old space left and moved on once you moved? The truth is, you could be paying too much in rent. Even if you need all this space, there could be an equal-size office for less not too far away. While you’ve been paying the same amount for the past five years, the local commercial real estate market could have changed, making even better office spaces more affordable. Even though an office move is a stressful affair, it doesn’t hurt to shop around and compare the rates.
Want to maximize your savings and cash flow even further with better bookkeeping and tax planning? The CFO Source can help!