How many times have my friends identified me as an expert in something, and my reaction is ‘If they only knew how much I learn everyday.’ Such comments by friends serve as both a compliment as well as a comparison; that I have some level of expertise they lack. That leads me to discuss a few ways that ‘The Financial Function’ is essential for business owners in ensuring profitability and resilience.
364 Days v. Tax Day
By show of hands, how many only think about bookkeeping when you realize tax returns are coming due? Simply from a stress-reduction standpoint, it makes sense to manage the financial position of your company in smaller chunks. An NFIB survey shows that 91% of small business owners seek outside help for tax preparation. That’s an indicator of value, and procrastination! Utilizing smart accounting the other 364 days in the year will unlock a huge upside for your business. It’s not about spending more on overhead, it’s about understanding more, and spending less. If you are someone who thinks about the books based on the tax cycle, you might be ignoring a weakness in your own abilities, and you are most likely leaving a lot of cash on the table when it comes time to claim your money back from the IRS.
Easy Money & Accounts Receivable
Who among us doesn’t know what cash going out looks like? But how savvy are we about collections? Time and time again we surprise ourselves with how easily we get rid of money. We don’t need to obtain a reputation for being a jerk, but we certainly need to make sure that we are using the quickest technology for getting paid for jobs and projects. From PayPal to Square, many of the solutions available for getting paid have very low cost, and they can get rid of a lot of headaches in the collections process.
The Big Bad Bank
Another thing we are all familiar with. Have you ever thought about the fact that you have several credit cards, all with different interest rates, not to mention the mysterious credit score. Do you know what your weighted-cost of capital is across your business (and personal) credit lines? Do you know if your business profit is higher than the loan interest you are paying out? Obviously I say all of this to scare you. Just kidding. I am encouraged that anyone with the dedication to start a business is absolutely the most significant person to turn it around and make it profitable. Make sure you are getting accurate and timely accounting advice and reporting! Banks make their money on low-risk investment and you as a business owner are capable of earning far more margin than a bank because you know the tricks of the trade. You just need the information from your accountant so that you know what goals to focus on.
I hope I’ve unearthed something useful for you. If you want to do more for the health of your business, please call me (no charge) so that we can have a confidential chat about your concerns. If any of this is Greek to you, then you should call me also.
As always, it’s a pleasure to ‘kill it’ with you.
Work big, amigos.
Chad Burns
QuickBooks Pro Advisor
Burns & Co. | Small Business Accounting
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