I’m writing this about you! Yes, often friends, clients and colleagues ask me if my most recent post was about them—usually not. There are so many of you who share universal issues when it comes to money and running your business profitably. However, this week I’m going to say YES—this song is about you! 99% of you will find yourself recognizing your business in this article.
Cash flow improvement is a hot issue for all businesses; in most, it seems like there is never enough cash when you need it. The last thing a business owner wants is to reduce their cash balance unnecessarily. To help you preserve or increase your cash, here are five cash management leaks to avoid.
1. Bloated Bank Fees
Some banks are more business-friendly than others. We recommend you assess the fees you are currently being charged to see if you can discontinue any unnecessary services or negotiate lower fees.
- Could you maintain a cash balance to avoid monthly fees?
- Are you being charged online banking fees and bill pay fees; and are these still necessary or do you have the capability of merging them or using a free payment service?
- Are you being charged for a high volume of transactions or cash drawer services, and are these competitive with other banks? If you have a gazillion dollars flowing through your account every month, the fees can be negotiated.
Banks, including national brands, that have not kept up with technology and have not automated a significant amount of their transactions are inefficient and must charge higher fees to cover their processing costs. If your accounts are located at one of these costlier banks, you do have a choice. However, I bank with a local bank that is extremely business friendly and I can wholeheartedly recommend them.
Are you sure that you are paying the lowest amount of taxes you legally owe? There are several places to look to make sure you have not overpaid taxes anywhere in your business or personally:
- Payroll taxes
- Sales and use tax
- Franchise taxes
- State and local income taxes
- Property taxes
- Federal income taxes
- Taxes that are specific to your industry
In preparing income taxes, a few of the easiest items to overlook include carryovers from prior years and new deductions you become eligible for. If you received a large refund this year, congratulations, but that means you gave Uncle Sam an interest-free loan on your money. You can do better next year by estimating your tax payments and paying only what’s due.
3. The Check Is in the Mail
Customers who take too long to pay you are big cash drains in your business. Consider changing your terms, asking for deposits, or becoming more aggressive with collections to bring your DSO (days sales outstanding) down. When you do, you’ll get an instant, permanent cash flow improvement.
4. Sweat the Small Stuff
You may have an eagle eye on your largest bank account, but what about your other cash stashes? PayPal, petty cash, and business savings accounts are among the places that may not get daily scrutiny. Make sure those accounts are properly reconciled and have the proper controls in place so funds don’t go missing.
5. It’s in Your Interest
A nice problem to have is when your bank balances get too large and you don’t need the money immediately. Make sure that money is still working hard for you by putting the excess in an interest-bearing account. It’s not much these days, but every little bit helps.
Make a Dash to the Cash
If we can help you plug any of these cash leaks in your business, please feel free to reach out and let us know….we’ll be waiting to help you!