1. Review your subscriptions
Annual, monthly, and quarterly subscriptions can often be an unexpected cash-drain on your business. Employees come and go and occasionally things like software licenses and product subscriptions don’t get cancelled prior to their departure. Even a recurring monthly charge as little as $25/month adds up over the course of a year. Conduct a scrub of your expenses and assign each expense to a category such as “one-time fee,” “monthly recurring,” or “quarterly recurring.” This way you can easily track which items you should routinely check on to determine if there are any adjustments to be made on the number of licenses you’re paying for and potential savings to be found.
2. Get rid of equipment you no longer need
When was the last time you used the fax feature on that fancy printer you bought? If it’s on a monthly service fee with a managed IT company, you may want to take a second look at your service agreement to determine if you’re really using it enough to warrant your paid subscription level. With the advent of Dropbox, Google Sheets, HelloFax, and DocuSign, you might not need a printer with a service agreement at all. Consider selling your high-priced technology and downgrading to a version without all the bells and whistles. Why pay for add-ons you don’t need?
3. Compare pricing on items you buy the most
You would be surprised at how much money you can save by setting up a business account with your nearest office supply dealer. Take the time to do a quick audit on the items your business buys most and the prices you’re paying for them. Send that list to a few office supply reps and see what kinds of deals they might be able to get you. You’ll save time by letting them do the comparison shopping for you, and you’ll also build a partnership that will come in handy when you want to buy big ticket items like office furniture, new equipment, or trade show supplies.
4. Consider investing in new technology
How much money do you spend on wifi access at the airports as you fly to and from meetings? Try this awesome wifi tool instead. How much are you paying for desk phones that your employees aren’t even using? Why not replace them with Slack? There is so much new technology out there that can help your business work smarter, faster, and cheaper. Check out this article by Cloudwards on apps your business should take advantage of to streamline some of your processes and cut costs.
5. Revamp your accounting software
Speaking of new technology, when was the last time you updated your accounting stack? Quickbooks is no longer the end-all-be-all when it comes to small business accounting. There are also multiple app add-ons your business can use to make daily tasks like expense reporting and invoicing that much easier. We love Expensify and Freshbooks.
6. Reevaluate your business credit cards
Hopefully you’re already actively building credit for your organization using a small business credit card. If not, here is why you should and what you need to know to get started. If you are, you may want to reflect on your service over the past year and consider whether the rewards offered were the most relevant for your business. The airport lounge rewards may have seemed like a great option a year ago, but maybe what your business really needs now is a better cash back option. Consider upgrading to one of these cards that made it on Nerdwallet’s list of top ten small business credit cards for 2016.
7. Make tax season easier
Tax season is less of a burden when you have processes in place to collect the data you need throughout the year. One of the most difficult tax burdens can be preparing an accounts receivables (AR) report. For small businesses making under one million in annual revenue, AR isn’t taxable until it’s collected. It’s important to keep an accurate record with dates of your cash receipts so you know in which year the revenue will be taxable. Here are a few additional guidelines to follow throughout the year that will make tax season less of a nightmare.
8. Create a cash-flow forecast
If you’re a small business owner, cash flow is king. It has a significant impact on your daily operations and ability to make decisions about buying equipment, hiring, and investing in growth. Your cash flow forecast is the one tool that you as an entrepreneur should be checking frequently so you know your cash position at any given point in time. Create both a 13 week rolling forecast to help manage operations at a granular level as well as a long-term forecast. A long-term forecast is absolutely necessary if you plan on raising funds from investors. In our experience, investors are often more concerned with your cashflow forecast than your financials. They want to know your cashburn and how far their investments are going to take your business. If you need help getting started with your forecasts, check out this detailed webinar we did with Now CFO for some best practices and a downloadable template.
9. Know your plan B
A cashflow forecast can help your business predict when a cash shortage is coming, but it can’t always help you prevent one. If your business is growing, it is inevitable that you will need to find access to working capital so the lack of funds doesn’t impact your trajectory. Business credit cards will only get you so far. There are various finance solutions available for businesses at every stage of growth. We created this checklist to help you determine which lender can best service your business’ particular needs.
10. Reevaluate your current loan
If you already have a finance partner, you can and should frequently check in to determine if you qualify for a lender with a better rate, more flexible terms, or— in a perfect world—a bank loan. Business financing is a ladder and you should consider each financing stage as a rung that will eventually lead you to a bank loan. If you were bootstrapping funds from investors last year, you may want to hold onto your equity and look at an alternative lender. If you had a small loan from an alternative lender that provided under 250,000 in working capital last year, you may be ready for a larger, more flexible line of credit.
These ten tips should get you well on your way to cleaning up your small business’ finances. If you have questions, comments, or additional tips we didn’t mention, please leave us a comment below.