Maybe you pay close attention to the finances of your business, but that doesn’t mean there’s no room for improvement. On the contrary: businesses of practically every kind can benefit from examining their finances and tightening them up. Performing this kind of “financial detox” might seem like a lot of work, but it doesn’t have to be. In fact, following a few simple strategies can accomplish a world of good.
We’ve put together a quick checklist you can use to put your company through its own financial detox and expand your bottom line. Follow these steps carefully and you may find that there’s more money in your company than you previously thought.
Perform a Budget Audit
Your budget is basically a map of your finances, so it is especially important that you check it frequently to make sure it is up to date and accurate. Look for current expenses that are no longer necessary. Some of the most common places in which businesses discover that they can cut back include office space, production costs, and insurance policies that have yet to be consolidated.
Plan Business Goals for the Coming Year
Budgeting isn’t just something you do without goals in mind. It is a process that you should use to help you plan for upcoming expenses. Is there a new product line you want to launch in the coming year, or new equipment that you want to purchase? Make sure you set these goals at the start of any financial detoxing so that you will know how much money you need to cut from your budget to afford them.
Review All Accounts Receivable
You may have more money than you expect tied up in invoices that have not yet been collected. Set a plan to remind anyone who owes your business money that it’s time to pay up. Of course, it’s important not to be rude if you want to maintain strong relationships with these parties, so issue a friendly but clear reminder four weeks past the date of filing each invoice and follow up once a month thereafter. Changing your tone a little each time you reach out should help you get the results you want.
Renegotiate Vendor Deals
If you’ve been running your company for several months, you probably have long standing relationships with the vendors who provide you with purchase orders and various services. Since you’ve been a good customer of theirs for so long, you might want to try renegotiating your contracts with them in the hopes of saving money.
Revitalize Your Cash Flow
You will likely find the process of improving your finances much easier if you can look forward to steady cash flow while you wait for your changes to take effect. One way to make sure that your business will have the cash flow it needs during this time is to apply for a business line of credit. Lines of credit are distinct from loans in that borrowers can spend from them as needed, and pay interest only on the amount owing. As such, they allow you to borrow only what you need during tough times and pay it back with relative ease. Better yet, they can prevent you from needing to spend your own money to keep a business afloat (which can be highly risky for many reasons).
Keeping a close watch over your finances will help your company avoid losses and grow with greater consistency. Pay close attention to the above strategies and use them whenever you feel the need to tighten belts at your company.