Business owners are always on the lookout to find ways to save time and money all while increasing profits. So, how do they do it? Below are 7 strategy tips to consider that may help your business become more profitable.
- Billing and collection controls. To increase your cash flow, consider reducing the time for shipping a product and sending an invoice to your customers. Rather than sending billing invoices once a month, send invoices semi-monthly.
- Receivables. Call customers that owe on past due invoices and do your best to resolve the issue while you’re on the phone. If it’s not possible to collect on the invoice at that time, set up a payment schedule and follow up with a reminder to the customer.
- Payables. If your records and procedures are a mess, you could be overpaying some of your vendors by paying late, resulting in extra fees on your bill. Some small businesses may not have the budget to hire an accountant. However, if you don’t maintain good records, in the long run it could cost you more than hiring a bookkeeper or outsourcing your bookkeeping needs. Invest in a good bookkeeping program. This will help you keep track of your receivables and payables. It will also help you track your customer and vendor information, outstanding or late invoices, and much more.
- Payroll. A major cost of a business is the cost of payroll. If you have employees just standing around trying to look busy, maybe you should consider:
- Reducing your work schedule to cut the cost of payroll.
- Consider using subcontractors or temporary employees if you have seasonal slowdowns.
- Review your employee insurance compensation. Certain classifications may raise your premiums.
- Review your group insurance each year to ensure you’re getting a good price. You may need to consider increasing the deductibles to lower your premiums.
- Financial Statements. There is a lot of valuable information on your statements. Keep track of your numbers and compare inventory revenue and turnover each year. Compare your profit margins each year for your gross profit margin. If your profit margin is falling, check out your products to see what sells and what doesn’t. It may not be worth your while to continue carrying certain products any longer.
- Forecasting. Using your financial statements you can prepare a budget as well as future projections. When you compare your projections you will be able to detect which areas need your attention before it becomes problematic.
- Professional team. If you own a business, you need a professional team on your side (CPA, banker, insurance agents, and a lawyer). Consulting your team regularly will help you avoid the consequences of bad business decisions.
Do you need a detailed analysis of your business? At Summit CPA we offer multiple resources to get your business on the right track. For more information, contact our office at 866-497-9761 to schedule an appointment with our advisors.