Spring Cleaning Season: Right Time to get Financially Organized

 Alika Cooper
  Apr 02, 2018

This is the time for spring cleaning of your business and as the activity implies, it is not much different from throwing open the windows of your home to let the fresh spring air in. The only difference is that it is far more complex and not primarily restricted to de-cluttering piles of pending work or taking an inventory. It goes much beyond that. In fact spring cleaning means setting the tone for reviewing business plans and making mid-course corrections if required. It also entails managing cash flow, launching new products and streamlining operational efficiencies through outsourcing of bookkeeping functions.

How then do you go about this all important spring cleaning work in your office so that 2018 sees your business running on well-oiled wheels?

Monitoring Business Expenses

While income is money generated from running the business, expenses are the cost that has to be borne for carrying out all business related activities. When you want to estimate whether you are generating profits on a product or project you have to analyze all the expenses associated with it. Since expenses are crucial to your profitability, you have to periodically review your business activities to tighten things up and exercise greater control over outflows. You need to look at every small outflow to plug gaps and leakage of revenue. The time to do this exercise is during this spring cleaning time as it will almost be impossible to take your mind of your core activities to look into this aspect midyear.

Organizing Cash Flow

Soon after reviewing your business expenses, your focus should shift to managing cash flow. Profits and cash flow are vital for keeping your business healthy and you should take measures in spring to ensure that both have robust growth. A good monitoring practice is to check cash flows every week. Poor in-flows and available cash do not mean that your venture is not profitable, it may just indicate that a major portion of cash flows are stuck in accounts receivables.

You have to plan ahead and through strict tracking make sure that you have enough cash to meet potential pitfalls if any or meet deadlines for large orders. Estimating accurately the amount of cash you need is the hallmark of a business with an expert accounting team and spring cleaning is the time to go through this exercise.

How do you go about it? You may consider a temporary line of credit to meet unforeseen requirements during emergency and tax times. For paying taxes a new credit line will help you meet the additional expenses while your normal cash flow is continued on routine activities. You should also meet your banker to review credit requirements of the running year and the options open if you suddenly need additional limits.

Reworking Business Plans

Business plans are guidelines that need to be followed for smooth functioning of any business but they are not cast in stone and need to be periodically revised and reworked in keeping with changing requirements. Here are the times when you have to modify them to keep up with the needs of business.

  • Launching a new product – By launching a product, you start a revenue stream that will positively impact your business. With increased cash flow you have to change your business plan as a fresh approach has to be made for optimum resource utilization. You have to take into confidence your investors as changes in business plan have to be informed to them.
  • Outsourcing bookkeeping functions – If you feel that too much of your time is being spent on monitoring backup services like bookkeeping and accounts it’s time to outsource these functions. By doing so, you save a lot on time and money as there will not be a need to update existing hardware and software at considerable expense. Any incremental increase in accounts activities will be handled by these bookkeeping agencies. But before doing so, you have to make suitable modifications to the business plan to include this new change and the best time to take a decision is during spring cleaning times rather than midyear.
  • Change in competitors – The best way to stay ahead in the race over your competitors is to be aware of what they are doing. Once you are conscious that there is a change in their functioning or that there is going to be a major venture coming up, you have to treat it as a potential threat. Business plan has to be then modified and new strategies worked to ensure that you do not lose out on market share.

Filing tax on quarterly basis

Small business owners have to file tax on quarterly basis. To make sure that the process of filing taxes goes off without a hitch, use the spring cleaning period to set records in order. If you do not have a separate bank account that can be used exclusively for tax purposes, open one now and set aside a regular monthly amount towards taxes. Also, have a separate business checking and expense account from your personal account. It will be easier for you to determine the expenses on which you can claim deductibles and help plan out your tax payments more accurately. If you are unsure about how to estimate tax obligations, hire a tax consultant to take you through the process.

Analyzing Flash Reports

A flash report or financial dashboard report is a snap shot of the key financial and operational parameters of a business and deals with liquidity, productivity and profitability. Being a glimpse of these functions, a flash report is designed to be data over a limited time usually a week. Use this spring cleaning time to thoroughly analyze the working of your business and make course corrections if necessary.

A spring cleaning of your business will bring in refreshing changes and will lead to visible changes in profitability, productivity and operational efficiencies.

Spring Cleaning Season: Right Time to get Financially Organized

Alika Cooper

Alika Cooper is passionate about customers and building products to change the way people run their business. She is also a big supporter of the startup community and contributing her skills, knowledge, and experience to assist people pertaining to finance and accounting matters.

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