A Fall Financial Checkup for Your Small Business
As autumn approaches, so does the final quarter of the year. With just a few months left in 2024, now is the perfect time to conduct a financial checkup for your small business. Whether you’re thriving or feeling the financial squeeze, taking some time now to reassess can make a huge difference come year-end.
So, what can you do with just a quarter of the year left?
As it turns out, plenty. Here are some tips on what you can do to assess and shore up your small business’ finances now so that you’re not scrambling during the last week of December.
6 Financial Checkup Tips for Small Businesses
1. Collect on Those Invoices
Collecting on overdue debt isn’t the most pleasant job in the world. But for small business owners, it’s an entirely too common and very necessary task that most entrepreneurs will have to take on at one point or another. It’s especially important to go after overdue invoices if you’re short on cash, as this is money promised to you for goods or services you’ve already delivered. Remember: The law is on your side.
Start by reviewing all outstanding invoices and categorize them by the length of time they’ve been overdue. Set reminders and make follow-up calls. You might even consider offering a small discount to encourage quicker payments or implement a late fee policy moving forward to deter future delays. If you want to learn more, check out our primer on small business collections. And if collections feel too daunting or time-consuming, many small business collection services can handle this for you, helping to get money in your hands faster.
2. Snip a Little Here and There
Cutting costs is always a challenge, especially for small businesses where every dollar counts. While major budget overhauls can be disruptive, incremental cuts add up over time.
Now is a good opportunity to take a deep dive into your monthly expenses and look for areas where you can reduce or eliminate costs without harming operations.
Start by scrutinizing regular expenses such as office supplies, utilities, software subscriptions and banking fees. Can you renegotiate any contracts or switch to a cheaper provider? Even small changes, such as switching to energy-efficient light bulbs or finding a more affordable internet plan, can lead to significant savings over time.
3. Review Your Budget
It’s easy to fall into the trap of “business as usual,” but when the end of the year is in sight, taking a fresh look at your budget is crucial. Assess your current financial position — how are you performing against your projections for the year? Are there areas where you’ve overspent, or places where you’ve underspent and can reallocate resources?
If you find that you’re ahead of schedule, congratulations! But if you’re behind, this is the perfect time to adjust. Revise your fourth-quarter budget to align with your current circumstances and ensure you’re set up for success as you close out the year.
4. Adjust Due Dates to Align With Cash Flow
Sometimes, financial stress can come from poorly aligned due dates, rather than a lack of revenue. If your income and expense patterns don’t match up, managing cash flow can be difficult.
One simple, yet effective, solution is to request new payment due dates from your utility providers, suppliers or other creditors. For example, if your busiest sales weeks fall at the beginning of the month, but your biggest bills come due mid-month, you can ask to push due dates back to better align with your income stream. Many service providers will allow you to change the due dates of your bills to help match your cash flow patterns.
This simple adjustment can smooth out your monthly financial cycle, even if it doesn’t directly save you money.
5. Consider a Small Business Loan
How you approach the next few months has a lot to do with your financial position. If you simply need to free up a little bit of cash between now and the end of the year, skimping to save a few bucks might do the trick. But if you really need to shore up your finances — say, because of an unexpected, large expense sometime this year — you may want to consider taking out a loan or other small business debt.
Debt should never be considered lightly, but it’s also no boogeyman.
There are various financing options available for small businesses, from traditional bank loans to online lenders offering short-term capital. If you’re confident in your ability to repay, a loan might give you the breathing room needed to tackle larger expenses or seize new business opportunities in the fourth quarter. However, always consult with a financial advisor before taking on additional debt to ensure it’s the right move for your business.
6. Plan for Taxes
As the end of the year nears, tax planning becomes critical.
Review your tax obligations now to avoid surprises in April. Consider deferring income to the next year or accelerating expenses into the current year to lower your taxable income.
This is also the time to check whether you’re eligible for any deductions or tax credits. If your business experienced significant profits, you might want to consider contributing to a retirement plan such as a SEP IRA or 401(k) for yourself and your employees. This not only reduces taxable income but also boosts your savings for the future.
Additionally, speak with your accountant to explore opportunities for year-end tax planning that could improve your bottom line.
Be Proactive With McManamon
The best thing to do after you shore up your finances is to make sure you rarely (or never) have to shore up your finances again — which you can do with proactive record-keeping and accounting. You don’t have to hire a CFO for that, either — the experts at McManamon & Co. offer a full suite of accounting services, including creating financial statements and filing your taxes. With McManamon & Co. on your team, you’ll learn to be vigilant throughout the whole year, avoiding situations where you suddenly need to play financial catch-up.
Whether you need to make a few financial adjustments now or want to direct yourself toward a smoother path going forward, call us at 440.892.9088 or contact us online today.
Tags: accounting, budget, financial checkup, McManamon, small business, small business accounting | Posted in accounting, McManamon & Co., small business, Small business finances