A spring cleaning refers to the ritual cleaning of homes in the spring. In the winter, everything is packed due to the brutal nature of the cold weather. When spring comes around, people open their windows, doors and clean their homes out thoroughly.
In business, this term ‘financial spring cleaning‘ refers to the actions performed to streamline all business aspects. In this routine, you primarily focus on increasing sales, revenue generation, and managing daily operations. It would be best if you took the time to refresh your finances. Notice of pending invoices, old bills, and a revision of business plans should all be examined to take immediate and necessary actions. These steps will save the business from loss and complications and benefit you much in the long run. So, how do you open your proverbial windows and doors to rid your business of the clutter? Let’s take a look.
Re-Examine Payment Policies
Increasing cash flow is the key to grow a business and enjoy a debt-free company. A small business owner should sit with their accountant with bookkeeping records. From transactions and customer history, determine the number of customers whose payments are pending and for how long. Generate an aging table for accounts receivable to know the period for which each payment is pending.
Categorize the customer according to the time of outstanding amount, i.e., 30 days, 90 days, or 120 days. This aging table is used to collect overdue payments, evaluate payment policies, and have a solution for the customer who is habitual in making delayed payments. If you get payments from a customer early, you may be saved from borrowing money or going into more debt.
Assess Pricing Models
The other crucial part of a financial spring cleaning strategy is an assessment of your pricing. The pricing of your small business should be comparable to your market competitors. Pricing should be at profitable levels, and you are not at a loss. But in fact, pricing is a problematic area for many small businesses. Many market conditions affect pricing, and it is not easy to manage prices. Still, the best strategy is to keep the pricing of products and services comparable to your market competitors.
Review Cash Balances
The coming of summer characteristically causes many businesses to postpone their huge purchasing decisions until the fall. This is typically a crucial time for small businesses because they have to pay fixed expenses like utility bills, office rents, etc. whether revenue is falling and you are at a loss. During this slow business period, you must prepare yourself well for the fall, maintain enough cash balances to get through successfully until your regular business is back. Reviewing of sufficient cash balances is a significant step for financial spring cleaning. If you contain adequate funds, it’s sensible to go for a working capital loan or a new line of credit.
Discover Opportunities for Re-Negotiations
Almost all businesses need to make long-term contracts. These contracts may include leasing an expensive piece of equipment long-term instead of purchasing it or making a long-term service contract. All of these agreements are done to save money. Sometimes, a considerable amount of fixed costs are allocated each month to pay for these contracts’ fees. These contracts should be reassessed, and re-negotiation opportunities should be explored so that money can be saved.
Analyze Your Subscriptions
Many small businesses subscribe to different types of software. Some of them are only required for a specific project or a limited time, but you don’t remember to cancel that subscription due to hectic business routines after it is no longer needed. In many cases, these are automatically renewed, as software companies have your credit card numbers. Each month, subscription fees are deducted, and you may not even notice. A financial spring cleaning provides you the opportunity to re-evaluate all recurring expenses and cancel such subscriptions that are not in use.
Just like spring cleaning is necessary for cleaning your home and enjoying the refreshing feeling of doing so, a financial spring cleaning is also an excellent step to refresh your small business’s productivity and improve its financial health. To keep your business prosperous, a periodic and detailed review of the business and adjusting accordingly is necessary. And good news! It doesn’t have to be spring for you to start!About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.