Most business owners have too much on their plate, so much in fact, they end up throwing cash and profit away. It’s not that they are so profitable and have so much cash they don’t know what to do, it’s that they “save time” by skipping the financial review. Here are 3 common places to quickly reclaim lost cash and profit (it’s like looking between the couch cushions for your business!):
1. Forgotten Subscriptions – Free trials and automated renewals are often forgotten. Almost every business I have ever worked with has some automatic charges happening on their credit or debit card for subscriptions they don’t even use.
Solution: Review all bank and credit card statements. Have your bookkeeper research any charges that are questionable. Also ensure that the subscriptions you want to keep are for the right amount. If you’ve changed the number of users, for example, you might not be on the right rate plan.
2. Late Fees and Penalties – Busy entrepreneurs often incur late fees because they are too busy to facilitate the payment process.
Solution: Simplify the process. Utilize a service like Bill.com, so you can quickly approve new bills and payments without digging through a stack of emails or piles of paper on your desk. You’ll still have to ask for details on things that seem out of place, but the process for normal bills will be much easier. You’ll also be able to keep up with the process while you’re on the road.
3. Unmanaged PayPal Accounts – PayPal is an easy way to accept credit cards, but it’s also an easy way to lose money. Many subscriptions are hidden in your PayPal account. They auto-renew and take money out of your PayPal balance. If that account isn’t managed and reconciled like a bank account, there’s a good chance money is being spent and it may not show up in your financial statements.
Solution: Treat the PayPal account like a bank account (instructions here: http://www.crackerjackaccounting.com/2010/08/paypal/). If you accept credit cards frequently, have your bookkeeper shop around for a merchant account with lower fees to save even more cash.
The solutions above are the best first steps to discovering your hidden profits. To avoid further problems, proper financial accounting controls and reviews are necessary.