Ever get the feeling like you’re making money with no idea as to where the profits are going?
We speak to plenty of businesses in that exact position, they have plenty of customers placing orders, they’re moving a ton of inventory and have orders placed well into the future but the bank account doesn’t reflect the amount of money they’re expecting it to…
It’s a confusing and downright frustrating position to be in as a business owner and one that many want to be rid of.
Fortunately, there are three quick and easy steps you can take to add some extra zero’s to your bank account fast, all while building an accurate picture of your business’s financial health.
The first step is an obvious one however you may be surprised at how inefficient you’re currently doing it.
And that’s keeping your accounts up to date.
Now we know you’ll be using special accounting software like MYOB, QuickBooks or Xero to name a few (if you’re not you should be!), however, someone needs to be monitoring the incoming and outgoings every day, reconciling everything as soon as possible.
Plenty of businesses have people responsible for these types of accounting tasks, however, more often than not the person responsible for doing it has a multitude of other tasks as well.
It’s not their sole focus and they’re just doing the best they can to keep everything ordered while working on a host of other tasks.
Quite often as the business owner, this task falls on you or a member of staff who may not possess the right experience on how to really do it correctly. (Through no fault of their own of course)
It’s just a case of wearing “too many hats…”
Another area that can mess up the profits in the bank is stock control.
Are you holding more stock than required?
Do you have too little stock forcing you to pay higher rates for expedited delivery when your business experiences a surge in sales volume?
Setting up a rigorous inventory control process can optimise your business procedures, allowing you to free up thousands of dollars which goes directly to, you guessed it, the bank account…
Stock is one of the single most important assets of your business.
Do you know your inventory turnover ratio?
Do you maintain a perpetual inventory system daily?
Have you established annual stocking policies?
Have you got solid inventory budgets in place?
These are all factors that when acknowledged and optimised, help drive revenue straight into the bank account, and help it stay there.
However, if you’ve found yourself left short and need to generate more revenue in a hurry there is a great technique to help you recover profits fast and efficiently.
And that’s setting up early invoice payment incentives.
By incentivising your debtors to pay your invoices promptly or even early you can ensure you get paid on time every time, leaving you with a more accurate picture of how much money you have in the bank.
The problem many business owners may not realise they’re suffering from is that they don’t have the right people in place, doing the right job at the right time.
You may have an accountant who crunches numbers for you but you need to ask yourself, “are they providing me with the tools, insight and advice to grow my business?”
There are accountants out there and then there are business accountants.
Business accountants (like us) are the ones who not only solve all the money problems with your business but actually partner with you and respect your knowledge as a business owner.
We know you know what you’re doing when it comes to your business, just like we know what we’re doing when it comes to your businesses accounts.
The problem so many business owners face of not being sure where their profits keep disappearing to is just the tip of the iceberg.
It’s just one of many symptoms that you need the right people in place to guide and advise you on important business decisions.
When you have dedicated business accountants, all these problems are avoided, you enjoy the peace of mind knowing you and your team can focus on what they do best while your accountants not only crunch the numbers for you but structure your business in a way that will keep you financially free for a lifetime.
At the end of the day, If you’re in a position where you’re not too sure what’s going on with your businesses finances, you need to ask yourself if you can really afford not to do anything about it.
It may be time to take the plunge and get a professional opinion on how to solve these problems.
If you’re ready to see why you don’t have as much money in the bank as you think you should, let us know here, we’ll give you a call completely obligation free, just so you can see where you’re going wrong.