How To Spot Wasted Cash In Your Business

However efficient you may believe your business model to be, it is highly unlikely that you are wasting no money at all. Learning to spot wasted cash can be the difference between turning a profit and looking at a loss at the end of the financial year.

Analyse Your Expenses

The most obvious way to spot wasted cash is, of course, to ensure that your financial analysis is robust and up to date. Too many small business owners satisfy themselves with a basic traditional budget, not going to the effort of putting together cashflow forecasts and profit/loss analyses for past years. This means that projections and business decisions are made on hunches, rather than hard facts. You should ensure that you produce cashflow projections and analyses for each major sector of your business, and that you know exactly where money is being spent, when, and why.

Benchmark Your Efficiency

Once you have a clear idea of where cash is being spent in the business, you need to do your research into how your expenses compare. This applies particularly to those companies in your sector, but for fixed costs such as rent and bills you can benchmark against almost any organisation. Ask colleagues and friends what they are paying for common expenses, or even ask trusted suppliers or customers. You will soon be able to tell if you are paying over the odds. You can also use one of the many online comparison sites which now exist for almost any financial arrangement, to ensure that you are not missing out on a better deal.

Get Input From The “Experts”

You don’t have to pay through the nose to consultants to get a good picture of where your business can improve its spending efficiency. Instead, simply ask your employees and your regular customers. Both of these groups are likely to appreciate that you are taking the time to ask their opinion – as long as you properly consider what they have to say. Employees will be able to point to ways in which the processes on which they work can be streamlined, and it may be a good idea to offer incentives to those colleagues who are most effective at improving business procedures. Customers, on the other hand, can offer advice about ways in which you can cut down costs which affect them, such as delivery or packaging.

Be Innovative

Above all, you shouldn’t be afraid to think outside of the box. If your business is conducted largely online, for example, do you even need a primary office? Increasingly, many small companies are operating through telecommuting and free online services, without the need for a permanent physical presence. Despite this, some small businesses are paying significant rental fees. With a little thought, it can become clear that an entirely new model of business could save you very large amounts of cash – freeing up your money for those expenses which will make a real difference to the services you offer.

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.

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