Tracking, managing and lowering business expenses are one of the most fundamental aspects of any company or organisation. However, it is an area in which so many business owners are going wrong. If you feel that this applies to your company, then read on to discover some top tips on how to track and manage your business costs more effectively, as well as some advice on lowering them too.
Stay on top of paperwork – There is only one place to begin, and this is with the fact that you need to keep on top of your paperwork. This is an area where a lot of people are going wrong. However, if you do not keep accurate records of everything, then you are assured to experience issues. Thus, make sure all purchases are recorded and spend a small amount of time every day entering your receipts into your accounting program. You should be able to download them from your bank with ease. If you cannot dedicate the time every day, then, at least, make sure you do so once a week. Furthermore, make sure all of your expenses are categorised, as this will make it a lot easier too.
Deal with late payments effectively – One thing you can do is carry out credit checks on any potential customers before you agree to do business with them. By doing this, you will be able to discover whether they are in a position that means they are likely to pay for you. There are various ways you can go about this. You could pay for a credit check. While this costs money, it may be the most advisable route to go down if you are agreeing to do a bulk of work for the customer in question. Aside from this, you can check Companies House for any charges that are registered, and you can ask for trade or bank references. By doing this, you will reduce the chances of working for a client that is likely to avoid paying you for months and months on end.
Know what is deductible – The next thing you need to do is make sure you know what expenses are deductible. You could be missing out on massive opportunities if you do not know what is deductible and what isn’t. This is something any good accountant will be able to assist you with, which is why their services are recommended. From travel to office equipment, there are so many different things that class as a deductible, yet you do need to be mindful that you only put things through the books that have been genuinely purchased for business purposes. If you have gone on business travel, you can’t deduct the few extra days that you spent exploring the city in question.
Know when is a good time to outsource and when isn’t – Outsourcing can save businesses a considerable amount of money but this is only going to be the case if you outsource the right elements of your business. There are a number of different things you need to consider. Firstly, it is better to outsource parts of your business that are not your core activities yet you cannot operate with them. This is where the likes of virtual services really prove their worth, enabling you to provide excellent customer service without distracting you from what really makes your business money. In addition to this, you need to look at the financial side of things. Would it be cheaper to outsource or keep things in-house? Work this out over a period of a year rather than only analysing the startup expenses.
Keep your personal and business finances separate – Things will quickly get confusing if you keep your personal and business finances in the same bank account. You need to keep both separate; not only the accounts but also you should have separate debit and credit cards as well. This will make it a lot easier for you to track your expenses and have better transparency when it comes to this aspect of your business. Imagine if you needed to search for a forgotten business expense and all of your personal purchases were mixed in there too.
Hire a chartered accountant – Last but not least, one of the most effective ways to make sure you keep on top of your expenses is to use the services of a top accountant. A lot of business owners view this as an unnecessary expense. However, the truth is, you are probably costing your business a lot more money by failing to invest in a fixed fee accountancy service. A top accountant will be able to take care of this aspect of your business for you, ensuring everything is handled efficiently and above board, and thus your time is freed up so you can spend it on other more profitable aspects.
As you can see, there are a number of different ways that you can track, manage, and lower your business expenses more effectively. If you follow the advice that has bee presented above, not only will you be able to keep on top of your books but you will be able to ensure that you run your business in the most cost efficient manner as well. This is something you need to continue to work on. It is not something you can just address once and forget about. After all, the business landscape is changing all of the time, and this has an impact on your finances.