Mistakes can happen in any business resulting in unnecessary spending; over-ordering promotional material that goes out of date before you can use it; ordering the wrong printer cartridges; placing an advert somewhere that won’t reach your target audience.
These mistakes we learn by and generally do no lasting damage. There are however some mistakes that can be fatal to a business, costing £Millions each year.
Here are 3 common financial mistakes that you must eliminate from your business immediately;
1. Not selling for your best profit
Many businesses are unaware of the exact profit they make as they don’t monitor closely enough the different elements that go to make up the sale. Costings are often incomplete or outdated. Price lists are not regularly reviewed. Sales volumes and sales mixes change and become out of step with the costing model.
Monitoring your gross profit percentage will identify any negative trends before it’s too late. If you don’t have a tried and testing costing system in place for your goods and services then it is vital that one is created. Review your costings and price lists regularly and closely monitor gross profit yields.
2. Not billing promptly…if at all!
The hard work in any business is making the sales, together with cost of product and marketing. Yet some people still don’t know whether they have been paid or not! The main reason is they don’t have a system in place to track invoices.
The cost of not tracking payments can be catastrophic! Like with many things the solution can be relatively simple – get a good physical and accounting process in place. As an exercise produce a flow chart of how your goods and services are stored, processed and billed. This will identify physical and accounting weaknesses to be addressed.
3. Not talking to your Accountant
Mistakes with your tax can be easy to avoid. There is one simple solution that will enable you to avoid every common mistake…TALK TO YOU ACCOUNTANT FIRST!
Most mistakes arise out of ignorance, which is understandable. Tax law is complex and without prior involvement of an expert the chances of expensive error or missed opportunity are high.