How your business handles money can either strengthen or weaken your company's ability to survive. Here are some tips to consider when giving your business a self-audit to help ensure that money is not being wasted and that it can all be accounted for.

1. Analyze Cash Flow

Utilize a statement of cash flow to view how and when funds come into your company and how and when they go out. Create a cash flow projection and put in place a practice of closely monitoring it. Revisit your accounts receivables strategy and see if you can make changes to decrease late payments by people who owe you money. Look for expenses that can be reduced or eliminated. Take the time to really analyze how you can optimize cash flow. Consider using software or hiring a consultant to help you with the best possible practices and strategies.

2. Look for Recurring Charges

Identify any recurring expenses you pay on a regular basis and determine which of these can be eliminated.

"Many companies try to get customers to sign up for monthly charges that continue unless users cancel," says Eleanor Hecks at Bplans.1 "That sounds convenient at first because you don’t have to worry about forgetting to pay a bill on time and suddenly finding your business without an essential subscription or service. However, it could also mean you’re paying for something the company no longer needs. If you find such instances, review the contracts and ensure they don’t have minimum timeframes."

3. Make Sure You Have Sufficient Paper and Electronic Trails

Ensure that funds are easily traceable. Maintain a paper trail and keep track of everything, regardless of how big or small the transaction is. If employees are authorized to spend money on behalf of the company, make sure they are keeping receipts and recording transactions appropriately.

4. Determine Where Expenses Have Increased

As time goes on, prices can increase. Review your regular expenses and determine which ones have gone up. If you are paying more for something than you were in the past, figure out if you're really getting your money's worth or if there is an alternative at less cost.

5. Evaluate Accounting Policies and Adjust Accordingly

Make sure you have sound accounting policies and that they are adhered to. Track all expenses, maintain accurate records, and perform monthly reviews. You might need to hire an accountant to help you keep your best practices on the right track and advise you on financial matters. Bookkeeping and accounting may not be your strong suit, but as a business owner, it would be a great idea to at least learn the basics.

6. Figure Out Where to Make Cuts

You can save money by eliminating expenses. The question is where to make your cuts. Is it time to move to a cheaper location or opt for a remote team approach? Can you trim supplies or travel expenses? Determine what you can do without (or with less of) and help put your company on more stable ground.

7. Perform Your Audit When You Have the Time

To give your business a proper financial audit, choose a time when business is slower. That way, you can better focus on it without sacrificing time that should really be spent in other roles, and you’re less likely to be distracted.

8. Make Sure You’re Complying with Tax Laws

It is, of course, imperative that you comply with all local, state and federal tax laws. Regulations are likely to change from year to year, so always read up on any changes. Your accountant can help with this.

9. Review Savings Practices

Take a look at how much your business is putting into savings. Set up a business savings account, if you haven't already, and come up with a minimum amount to add to it each week, month, or quarter.

10. Determine if You Need a Small Business Loan

Consult with your accountant and your business banker to see if you would be best served by taking out a small business loan. If you need money to expand, purchase equipment or inventory, or even just increase working capital, this is an option worth exploring.

A self-audit of your business can reveal a lot about how money is really working for or against you. Find a good time to get into details and make this the year you boost financial efficiency.

 

1. https://articles.bplans.com/financial-audit-process/