4 Steps to Spring Clean Your Business Finances
Spring cleaning your business isn’t just about cleaning out. It can also be about putting yourself back at the financial heart of your business. By taking a few simple steps, you can make sure your finances are in tip-top shape. It’s likely to give your business the foundation it needs to sustain the growth you want throughout the rest of the year and beyond.
Get your taxes squared away
Reach out to your tax advisor and, if needed, ensure you have all of the necessary extensions filed. If you’re a partnership, large partnership, or S-corporation, the IRS Form 7004 for an automatic six-month extension was due to the IRS on March 15, 2017. If you’re a C-corporation, your deadline to file for the automatic six-month extension is April 18, 2017.
Many tax advisors automatically file these extensions on behalf of their business clients. There’s no shame in dropping an email or phone call to make sure your extension has been filed; or if you’re a C-corporation, that one will be filed by the deadline.
Now may also be a good time to get a list of needs from your tax advisor so they can begin the process of preparing your business returns. While your extended deadline might be a ways out, getting a head start can be the smart route. It helps you avoid any last minute surprises. It will also help you plan to fund any balances due with your return and make cash-on-hand adjustments to ensure timely payment.
Perform an AR/AP review
Get with your accounting department or bookkeeper and do an annual review of both your accounts receivable and accounts payable. Not only can this give you a detailed picture of your business’s finances, it can also give you the opportunity to be a leader in your client and vendor relationships.
Do you have receivable accounts that are consistently late paying? Consider offering early pay incentives and reach out to those accounts to establish terms.
Does your business have vendor relationships that could be re-negotiated? Consider reaching out to long-term vendors and exploring opportunities for early payment discounts as well.
Just because you’ve always done it one way doesn’t mean it always has to be done that way. A phone call could save you anywhere between 1%-5% with vendors who are eager for faster payment. You could also turn a slow paying customer into an early or on-time customer, giving your cash flow a year-round boost.
Perform a recurring expenses review
The phrase “set it and forget it” can have benefits for automating your ongoing business expenses. But how many things have you actually set … and forgotten? Have your bookkeeper give you a report of recurring monthly, quarterly, and annual expenses that get charged to company credit cards.
This simple step alone can save you hundreds to thousands a year, revealing services and subscriptions that are outdated, no longer needed, or even duplicated with newer services. Of the services you wish to keep, look for opportunities to convert monthly billing into annual billing. This can often offer substantial savings.
Evaluate your financial partners
While examining your recurring expenses, don’t forget to look at imperative service providers like payroll services. Be sure to analyze the entire depth of your services as well, not just the monthly expenditure.
For example, are you using everything you pay for? Most payroll providers offer packages and if you’re subscribed to one, make sure it’s the best package for your business. Your payroll processing team may compare the difference between what you use each month and what you pay for. If you find that you use less than what you’re paying for, you can explore downgrading your service. Alternatively, you can explore alternative payroll providers who offer a package or a la carte options that more closely match your payroll demands.
As a leader, your time may most often be spent growing your business, not in the day-to-day of its finances. But, a few simple steps can help you ask better questions, build a stronger foundation for growth, and ensure that you’re running a lean financial machine with the oomph you need to push your business to new heights in this new year — and beyond.