Estimated reading time: 3 mins
In business, taking care of your finances as best you can is crucial. That being said, many businesses are leaking money without the owner even realising it. Let’s take a look at some of the things you should be looking for to indicate whether your business is leaking money:
You Pay Employees For Hours They Haven’t Worked
Paying employees for the hours they’ve worked is a legal requirement, but why would you pay them for hours they haven’t worked? If your employees are taking extra long lunches, and even taking part in ‘buddy punching’ (where work colleagues clock them in even when they’re not at work) you could be wasting thousands each year. Make sure you pay close attention to timesheets so that you’re not paying for unworked hours.
Hiring The Wrong People
Trusting your employees is crucial. However, you need to make sure you’re taking the time to hire the right people first. You don’t want to hire people who are going to take advantage of the company and take as many liberties as possible. Remember that a quality employee will come with a price attached to them, so it’s always worth hiring those who are a little more qualified for the role. Bear in mind, though, that qualifications are not everything. Sometimes, hiring somebody smart is enough to help your business.
Your Billing Systems Aren’t Up To Scratch
If you still run your accounting the same way you did years ago, then you’re probably doing it ineffectively. Outdated practices are going to hold you back. With many new systems, you can easily track who owes you money, send statements, and record payments. Incorporating online invoicing is a smart move. You don’t want manually handling this data to cause you to lose revenue due to human error.
Buying Technology That Isn’t Giving You A Return On Your Investment
Buying new things for the business can be fun, but you need to be sure that it’s giving you a return on your investment too. Before you splash out on something new, figure out how this new piece of equipment is going to help you reach your goals. Make sure you also work out how it’ll integrate with your existing technologies. You should then find a way to measure the ROI. Don’t splash out on new things without thinking about the true value first and how it’ll impact your ROI.
Employee Spending Isn’t Aligned To Budgets
Many employees have to spend company money for it to function – consumables, services, contractors, etc. It’s important to track employee spending so that it is in line with your cashflow and budgets, or else you could find that your business runs out of operating cash and can’t pay the bills and staff.
So track employee spending – this way you can view who is spending what. If it is helpful, you could consider prepaid cards, where you put a set budget on how much someone, or a department, can spend. This way, you have greater peace of mind.
Paying Late Fees And Juggling Bills
Maybe you don’t have the money to pay your bills expense, or you’re simply not paying them on time, so you’re paying the late fees associated with them. You need to get a better hold on your finances, keeping money in the business to pay your bills. Having a budget is crucial. You should also set up automatic payments so you don’t have a choice but to pay. Having your utilities cut off could put you out of action and mean you lose even more money.
So, is your business leaking money? What are you going to do about it? Leave your comments below.