Five Cash Leaks to Avoid
Cash flow improvement is a hot issue for small businesses; in many businesses, 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 to be mindful of.
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.
Banks, including national brands, often have numerous types of accounts with various services included, minimum balances, and other features. The fee structures vary widely among this range as well. Far too often we see clients playing needlessly for services they never use. If your accounts are located at one of these costlier banks and you’re getting hit with monthly fees, know that you have a choice.
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:
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. This is a major weakness in most small businesses- they don’t realize how many days of revenue are sitting in their A/R. When you bring this DSO number down, you 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. Hey, 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 don’t hesitate to reach out and let us know.