Small businesses are constantly concerned with cash flow. One of the areas that can have a negative impact on your cash flow, is undermanaging the seemingly “little” expenses.
Here are some areas you should keep an eye on throughout the year. Although it may seem like pennies on the dollar, saving on these expenses can make a difference in how successful your year is.
Credit Card Fees
Have you reviewed what you are paying in credit card fees lately?
We recently changed our credit card processor and learned if you become PCI compliant, and able to accept a chip card, it can reduce your monthly fees.
Check with your processor and find out if there is something you can change to get a better rate.
When was the last time you did a review of your bank charges?
As a business owner, you should always know how much, and for what you are being charged.
Do you have overdraft charges?
If you are bouncing checks, something must change.
Managing your cash flow is key to running a successful business.
Freight and Postage
How closely do you monitor your shipping charges?
Have you checked into which service provider is the better fit for your shipping needs?
Are you managing your time to avoid the additional fees for “express” shipping?
Are there things that can be emailed or accessed online that can save postage costs?
Addressing any one of these questions could give your cash flow a boost.
What are you spending on copy paper, pencils, pens, and other miscellaneous office supplies?
Since these are usually lower-cost items, we tend to think “it’s only a few dollars.”
We get in the habit of reordering what we have always bought from the vendor we have always used.
If you don’t have time to “shop around” for every order, at least schedule a time every few months to compare prices.
Also, implement procedures in your office to eliminate waste, and to avoid rush orders.
Meals and Entertainment
I should just say meals, as deductions for entertainment were eliminated with the Tax Cuts and Jobs Act.
This is a hot topic in 2021 with businesses being allowed a 100% deduction for meals.
As a business owner, beware that now, more than ever this is a big red flag area for the IRS.
We frequently hear business owners say, “I’ll just write that meal off as a business expense.”
A word to the wise – make sure you keep the receipt of the meal and itemize on the receipt who you met with, and what you discussed.
Although it may be a deductible expense, the burden of proof is on you!
Also, set a monthly budget for these expenses. If you budget $200 you will be less likely to overspend and compromise the success of your company.
In the end, it’s all about cash flow. If you can be a little more aware of how you spend your money, it can go a long way in creating or improving cash flow in your business.