The best way to find what works is to try everything that doesn’t work. Trial and error is an effective, although expensive, teacher.

Here are several financial tips that I’m hoping you won’t have to learn the hard way to appreciate their value. These can be set up and administered by your trusted accounting team.

1. Have separate credit cards for business expenses.
2. Create a paper trail for all transactions so that your accountant (internal or external) can verify and properly code your transactions.
3. Review statements and invoices for accuracy and compare them to your purchase order. It’s not uncommon for suppliers invoices to vary from your original PO.
4. Monitor your cash balances regularly. You want to identify patterns where you may need more or less cash and also generate returns on surplus cash.
5. Beware of too much cash. If you’re planning on selling your business, the majority of your assets must be used in your active business so that you can qualify for capital gains exemptions. Talk to a qualified tax expert to make sure your piggy bank doesn’t end up triggering a tax problem.
6. Shop around. We’ve used a procurement expert (www.casemoreandco.com) to help negotiate major client purchases. This generated a net overall savings, a smoother transaction and positive ROI.
7. Always get professional advice before you enter into a major transaction. There are significant tax, accounting and financing options that can impact your financial statements and bank covenants. You don’t want to accidentally create a problem.
8. Love your banker. They see best practices and worst practices all the time and have creative, flexible ways of ensuring that financing maximizes your potential for business success…because they want you to pay the loan back!
9. Don’t buy it and don’t own it. Rent it or borrow it or lease it for the short term. You’re probably not in the business of generating returns from assets-this is very difficult and very expensive.
10. Be your own banker. Make sure you have a reserve-cash or credit-to carry you through the usual and unusual peaks and valleys of cash flow.
11. Don’t be your customers’ banker. If they can’t pay within 30 days or the agreed upon time, take a tough stance. Send them the ‘fish letter’ meaning COD-Cash On Delivery and don’t risk your profits on their payments.
12. Make sure you can sleep at night. Since the economy has proven that there really are no experts, although there are some pretty good speculators, you need to be your own expert. If you hate debt, then don’t use it.

Which of these tips can you use to save time, increase revenues, decrease costs or grow your business?

Copyright 2011 Phil Symchych. All rights reserved.

This entry was posted on Tuesday, September 13th, 2011 at 8:02 am and is filed under Financial Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.