Keeping your company profitable when the economy slows
down is a challenge for every business. You may be able to boost your bottom
line with the following financial controls.
* Watch your customer credit. Use an accounts receivable
aging report to flag past due accounts. Follow up with a customer immediately
when you spot a delinquent bill. Don't extend any more credit until the
customer brings the account up to date.
* Don't pay too quickly. Use an accounts payable aging
report to keep money in your account as long as possible. Take advantage of
early payment discounts if it makes sense. Otherwise consider using the full
grace period to pay your bills.
* Invest surplus funds. Keep most of your money in a
business savings or money market account where it will earn interest until you
need it.
* Reserve cash for your short-term needs. Prepare a
quarterly cash forecast report so you can anticipate cash shortfalls in time to
carefully weigh your financing options. Establish a line of credit before you
need it.
* Reduce inventory. Create a tax deduction and free up
valuable shelf space by donating obsolete inventory to your favorite charity.
If your inventory includes slow-selling or high-cost items, consider making
them special order items.
* Control your labor expense. Provide adequate training
for your employees. Cross-train every employee to do another's job. Ask your
employees to make a list of their assigned tasks. These steps may help you
eliminate paying for unnecessary work and create more efficient processes for
getting a job done.
* Resist the temptation to lower prices. Instead, look for
ways to improve your product or your customer service to attract new customers
and retain the ones you already have.
Please give us a call to discuss these and other
profit-boosting ideas for your business.
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