FIND THE HIDDEN EXPENSES IN YOUR BUSINESS

AUTHOR: Katharine Terry

If you are always completely up to date with your bookkeeping, you can probably stop reading now. If you treat your invoices and cash receipts like collectables, this one’s for you.

SPOILER ALERT: The hidden expenses in your business are the ones you haven’t entered into your books. Yes, there are intangible expenses like that less-than-motivated employee or unreliable piece of equipment that cost you completing more billable work, or a better reputation and goodwill, but to know your cash position, it is essential to keep track of cash and credit expenses.

‘But I’m OK, I have money in the bank…’

…which you need to pay your employees, loans, credit cards, those invoices scattered around your desk, and maybe yourself.

Like your car, your business will run smoother if you regularly check its performance. Consider your bank account like your car: getting your car checked before you go on a road trip is like knowing the demands on your cash before you commit to new expenses.

NOW is always the best time to have all your financial commitments visible. Implement and stick to simple processes to capture expenses as you incur them. This means you will be able to view your cash position at any time and make informed decisions about new requests or suggestions, like upgrading that unreliable piece of equipment.

The processes you use will need to for your unique business. If you manage your own office and are ‘on the tools’ most of the time, you might block out a chunk of time on one or more days per week to keep your office on track.

If you employ someone to manage the office, you might require them to enter all transactions daily, into a simple spreadsheet for your reference if you use a bookkeeper, or directly into your bookkeeping software. Whatever process you decide on, it has to suit the way you run your business for it to work.

Whatever business you are in and however it’s staffed, you can be sure that there is a way to keep your outgoings visible. At first it will take some effort to stick to the new routine but over time it will become as natural as any other normal activity you do in your business.

Use a cashflow forecast tool, like the one that comes as part of our AAA Consulting Membership, to see further ahead than the end of month.

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