Five Ways That Your Business Can Save Money and Accumulate Profit

Accounting consultationOut of the millions of people who inhabit the Greater Chicagoland Area, it would be reasonable to state that only a handful possess the knowledge, resources, and experience required to properly operate a successful business. The purpose of business is to create profit. Here at Accounting Solutions Ltd. we work closely with business owners both naïve and experienced alike, to help create those consistent profits. Unfortunately, diving into the ins and outs of how to generate income is a daunting task, one that may be best suited to a sit-down discussion with our Senior Partner. For now, we have compiled a brief list of some quick tips to follow if you wish to ensure your business’ financial success. For further guidance or advice, don’t hesitate to give us a call or reach out to us via our website. We are always on the look out for entrepreneurs with the drive to prosper in these competitive economic times.
Watch Your Spending: Although it may be tempting to invest all of your money to give your enterprise an additional competitive advantage, we always recommend to be wary when spending all of your funding. Unforeseen expenses are common and the downfall of many businesses. You should do your best to be conservative. By working closely with our clients, Accounting Solutions Ltd. has accumulated a number of financial strategies that can help minimize investments and maximize long-term profits.
Watch Your Receivables: If all of your money is sitting in receivables rather than in your bank account, you are going to have some serious problems. Extending credit to any new customer without a proven payment history, should only be done after due consideration. Even then, you should be careful how much credit is given. Maintaining accurate financial records is a vital component of operating any business, especially when tax season rolls around. In order to ensure that your project has continued success, keep a detailed list of what money is owed to your organization. Continuing cash flow difficulties are a sign of unprofitable operations. Turning those receivables into a positive cash flow is one of the keys to long-term profitability.
Strategize Your Line of Credit or other Credit Facilities: Rushing to the bank when your cash flow is negative will probably end poorly. Financial institutions are much more willing to lend money to organizations that are flush rather than those that are overdrawn. Because of this, opening a line of credit when your business is doing well and has a positive cash flow is a much more effective strategy. Also, when looking at potential lenders, be careful of the points, interest rate and fees on the loans. Many credit facilities such as Receivables Factors can be deceptively expensive. Do the math, before agreeing to anything.
Watch Out For Late Fees: In reference to the aforementioned point, banks will almost never lend to a business which owes a lot of money in bills or has a detrimental credit rating. No matter what you do, pay your debts. Outstanding payables can cause a variety of issues that may ultimately sink your business. The guidance of a good CPA or EA is the best way to avoid these pitfalls.
Discounts? Maybe Not: Few things draw in new customers quite like a sale or a discount. While it may be tempting to offer these, it may also be a poor strategy. Most discount hunters don’t become long-term, profitable clients. Once the discounts end, the sale hunters generally don’t return either. Discounts can also seriously inhibit your cash flow. Regular customers that would normally pay full price will pay less. This will reduce your cash flow making it difficult to cover your expenses. Although this rule certainly differs depending on the nature of your business (discounting items at a grocery store is much more reasonable than offering free massages for a month), you should generally reserve discounts and special deals for situations that will create long-term growth and prosperity.
The ever-shifting landscape of the Chicago business scene can be a difficult field to navigate. The road to positive income accumulation is one strewn with trials and tribulations. Fortunately, with the proper counseling we believe that most entrepreneurs can achieve prosperity. By working closely with our clients, our accounting firm has borne witness to many business owners experiencing unparalleled levels of success. Please give us a call at your earliest convenience to schedule a complimentary consultation. Our experienced team will be happy to help you on your road to success.