Spring is officially here again! As the days get longer, it's time to shake off the winter blues and get ready for a fresh start. While spring cleaning typically conjures up images of decluttering your home or office, it's also a fantastic opportunity to give your finances a thorough overhaul (and as you’ll see, sometimes you can do both at the same time).
Staying organized–especially with financial records–is one of the best ways to ensure your business continues to thrive. So let’s dive into 4 simple but effective ways to spring clean your finances and ensure your business’s financial life is in good shape for the year ahead.
1. Kick off financial spring cleaning by going paperless
From opting out of paper credit card and bank statements to transitioning AP and AR to a digital system, there may be some low-hanging fruit to help you declutter your finances. While it may take some work upfront to set things up, there can be a massive payoff in terms of peace of mind and improved efficiency all summer long – not to mention for years to come.
Bills and invoices
While digital payments have become common for consumers, many businesses still use paper checks to pay vendors and for other services. Switching over to digital payments is an excellent first step to not just clear clutter in your back office but also help you improve payment security, streamline your operations, and give you insights to make better financial decisions.
If there are situations where you’re still sending or receiving paper checks, switching to methods like ACH bank transfers can give you the added benefit of improving cash flow, since you’ll be dramatically reducing the amount of time it takes for payments to clear.
By switching both your payables and receivables over to a digital system, you’ll virtually eliminate the need for paper. You can save money and time by sending payments with just a few clicks and automating recurring payments. Automation can be valuable since it reduces human error and time spent on routine tasks.
Finally, review payroll. Are there ways you can eliminate paper there? Having a digital system where employees can submit work hours electronically and get paid by direct deposit can also help you declutter and stay efficient.
Ensure all your financial documents are secure and easy to find
Without so much paper, you’ll find it easier to keep all your financial records organized and easily accessible. For example, when BILL customer Mount Tamalpais College switched, they were able to more easily adapt to hybrid work, streamline AP, and spend far less time shepherding documents for signatures and approvals. And the next time they go through an audit, they’ll have all their important documents in one convenient place.
2. Take financial inventory
Another helpful step to spring clean your finances is to take financial inventory and review your business spending habits. Check the status of all your business bank accounts. Review your credit report, credit card accounts, and any other accounts you use to run your business. The goal is to gain more comfort and clarity over your finances and to use this information to make more informed financial decisions.
Are there places you can improve your financial habits?
Take a close look at your expenses and income over the past year. Where could you cut back or potentially reallocate funds to better align with your goals? This could include reducing spending on monthly bills, like subscriptions or services you may no longer need.
It could be reviewing all your insurance policies you use for your business and finding an alternative that meets your needs at a lower cost or identifying and eliminating organizational inefficiencies. Even small changes can add up to significant savings over time.
Review your cash flow
If your cash flow is consistently low, implement strategies to improve it. Improving cash flow depends on your specific business needs, but you can focus on reducing expenses, increasing sales, or negotiating longer payment terms with your suppliers.
Evaluate credit card debt and other liabilities
If your business has any outstanding debt, look closely at the terms and interest rates. Review your financial accounts and consider paying off high-interest debt first or consolidating multiple debts into a single loan with a lower interest rate.
Restructuring debt is a common method companies use to get better terms, like lower interest rates or monthly payments. You could consider refinancing debt if you pay high interest on loans and current rates are significantly lower.
Evaluate and negotiate vendor contracts
Another important aspect of spring cleaning your finances is evaluating and negotiating vendor contracts. Ensure you're getting the best deal possible and that your contracts reflect the current needs of your business. Don't hesitate to negotiate better terms or switch to a more cost-effective vendor if necessary.
Go over your pricing strategy
Are you valuing your produce or service properly? As your business evolves, so do your costs and expenses. Take a close look at your pricing strategy to ensure you're maintaining your margins. Consider adjusting your prices strategically if necessary.
3. Go over all of your outstanding invoices
According to an article published in PYMNTS, 49% of invoices become overdue. Since getting paid on time is essential to your company’s financial health, it’s time to roll up your sleeves and do a deep cleaning of your accounts receivable.
Use your reporting system to pull up all your unpaid invoices. This will quickly give insights into which clients owe you money and if some regularly take too long to pay.
Then, create a follow-up system to help ensure you get paid on time and have the funds to keep operations running strong. For example, if you use BILL, you can set up auto reminders to let clients know when payments are due or if anything is overdue.
Make it easier to get paid
By making your payment process easy, you can help avoid late payments and have more control over cash flow. Here are just a few ways to help:
- Expand your payment options. By accepting credit cards, ACH bank transfers, PayPal, and more, you’ll make it easier for people to pay you–their way. You can also use an online portal to enable customers to pay invoices online.
- Set up automatic payments. Let customers set up autopay for recurring payments. That way, they can automatically send funds at a predetermined time.
- Consider flexible payment options. Setting up a payment schedule to break down payments into smaller charges may be helpful.
4. Set new financial goals and plan for the future
Before you mark your financial spring cleaning checklist complete, it's essential to spend a little time planning the future of your business. This could include setting aside funds for future investments, building an emergency fund, preparing for potential market changes, or even succession planning and contributing more to your personal retirement accounts.
Consider ways to invest in yourself and your team this year. Are there new skills you and your team can learn to work more effectively? Are there conferences, workshops, or courses you could get involved with this year? Investing in professional development can help you stay ahead of the curve.
Spring clean your finances with BILL
By taking these 4 steps, you’re well on your way to spring cleaning your business finances and improving your bottom line. By going paperless, doing thorough financial inventory, reviewing unpaid invoices, and planning for the future, you can ensure that your business is on the right path to meet its financial goals this year and beyond.
Ready to spring clean your finances? BILL can help! Try BILL risk free.