Here we, your certified chartered accountant, provide you with seventeen business tips – 18 if you include our recommendation to come and see us, that will help you pay off the business loan more quickly than you may have thought possible. We consider a range of items from discounts, to adding administration fees, the way to use the credit card, negotiating prices with suppliers…
- A line of credit account allows you to deposit all of your business receipts straight into it. This makes it easier to keep track of the progress of your account.
- Work from a budget that includes both your income and your expenses. Ensure that your income exceeds your expenses by at least the amount of a standard loan repayment. Also, aim to leave 10% of your income in the account each week for savings, or to invest in business growth.
- It is easier to effectively manage your business loans and accounts by making use of one of the many online “Business Loan Checker” programmes. The firm that loaned you money is bound to have one on their website.
- Incorporate your income and expenditure budget into your business plan and review it on a regular basis. Involve your accountant or business adviser, as they will often think to include things that you’ve overlooked. (It also helps to get the opinion of an adviser who is independent of your business.)
- Regularly review your debt collection procedures and offer discounts to entice your customers to pay on time. These discounts actually cost you far less than collecting outstanding debts.
- Charge an administration fee to customers who pay their 14 – or 30-day accounts late. Be up front with all of your customers and incorporate this in your invoicing system.
- Regularly review your budget expenses to compensate for price increases.
- Use a 55-day, interest-free business credit card for as many expenses as possible. This allows you to delay your expenditure and avoid interest penalties.
- When using your credit card, delay your major expenses until the beginning of the statement cycle. (This allows you to make the most of your 55-day interest-free period.)
- Be prepared to sacrifice some of your “non-essential” expenditure. Do you really need that business equipment? Can you do without that stationery? Or that trip to the coffee shop? Learn to make do with what you have, rather than gather large quantities of the items that you only use occasionally.
- Don’t always buy goods brand new – quality second-hand items can save you a lot of money. Auctions are a great place to get bargains.
- Conversely, if you have items you don’t use now, don’t hoard them – try to sell them (try Trade Me, or your local newspaper classifieds).
- When you buy, really shop around – also try to negotiate the price. You’ll be amazed at the number of discounts you can get with the right approach!
- Smart money managers know that sometimes it is better to rent than to buy, e.g. equipment for a “one off”, or equipment likely to become obsolete quickly.
- Carefully investigate your phone and internet costs … with more and more phone/internet companies becoming available to choose from, you may be able to arrange cheaper accounts.
- Don’t let your staff purchase stationery without you reviewing the order. Given free reign in the stationery store, your staff can ruin your business!
- Be careful when purchasing (or leasing) computer equipment and software. Make sure you really need the software before you buy it.
Recommendation
If you have or are thinking of a business loan, give me a call. We can then provide you with an independent, impartial advice. You can’t be too careful, especially if the financial institution is requiring a personal guarantee.
Phone or text me to arrange a suitable time and place: 022 043 1199
