Maintaining control over the financial aspect of running a business can sometimes be hard to do, but it’s an essential part of maximising your cash flow and increasing profits. Many business owners have experienced cash flow problems in the past and expenses are one of the biggest contributors to that. However, the good news is that it’s easier than you might think to implement efficient practices to minimise cash flow problems and boost your profits overall.
Create a budget
Staying on top of your expenses means understanding where you want your money to go in the first place, and that starts with a budget. If you don’t know where your money is going every month, you won’t have any way of knowing if you’re overspending or spending on the wrong things. Creating a budget, and more importantly sticking to it, will help you identify any areas where you’re over or underspending, and will help you adjust your spending before it’s too late.
Build accurate financial statements
Accurate reporting is the key to making better financial decisions, whether you complete those reports on a monthly, quarterly or annual basis. It can help you answer important questions, such as whether you can afford to upgrade your premises, if you need to switch suppliers or if it’s within your means to arrange a company-wide event. The more accurate your financial statements are, the more able you’ll be to pay the right amount of tax too, which can be a big expense for businesses.
Work with the most affordable suppliers
Utilities are an unavoidable part of running a business – you can’t get away from paying water, gas and electricity bills. However, that’s not to say that you need to be paying extortionate amounts for these essentials. Energy brokerage consultants can help you find suppliers that offer energy at cheaper prices or more sustainable solutions to your needs, to help you keep costs down while still maintaining a comfortable work environment.
Know your allowable expenses
Tax season is always a stressful time for businesses, but more so if you’re unprepared. By regularly tracking your expenses, you’ll have an accurate portrayal of where your business is at financially, but you also need to be aware of what expenses are deductible from your tax, so you don’t end up paying more than necessary. For example, marketing and advertising, travel expenses, office supplies and staff costs are just a few of the examples of tax-deductible expenses you can claim for.
Digitise your processes
Between apps that work via your phone’s camera to printer scanners and software for taking images, you can go paperless with ease as a business which saves you space in terms of storing documents and also ensures compliance with third parties. Scanning and storing documents increases security and makes these files more accessible to those who need to access them, such as tax professionals and accountants.
Also Read: This Isn’t a Man’s World: Women in Business
From receipts and invoices to expense claims, digitising your paper process ensures you simplify your tracking and keeps this information close to hand without the risk of a security breach or loss through an unexpected disaster such as a fire or flood.
Consider different business premises
If the past few years have taught us anything, it’s that businesses are able to operate differently with great success and sometimes even more successfully than they can with a standard commercial property.
From fully remote to hybrid working and flexible coworking spaces, there are various options available to businesses that could help bring operational costs down and create a more versatile work environment for staff. Since rent can be a big expense for businesses, considering alternatives could help to bring costs down. Perhaps you can switch to a smaller office, for example, to accommodate a hybrid working system, or maybe you want to invest in coworking spaces for your team.
Final thoughts
Businesses expenses aren’t something you can avoid completely as a business owner, but there are certainly ways you can reduce them to increase your overall profits. From getting better at tracking your expenses and budgeting accordingly to identifying cheaper suppliers to bring costs down, there are several ways that you can manage your business expenses more effectively to reduce stress on your company.
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