How to Plug the Profit Leaks In Your Business

How to Plug the Profit LeaksQuick Books provides small business owners with the data they need for tax purposes. But are you using the information to help you make better business decisions, uncover opportunities and plug the profit leaks that cost you money?

If too much of your profit is slipping through your fingers, here are a few suggestions.

7 Tips to Get More From Quick Books

#1 – Stay Up-To-Date. Keeping records current does not require posting transactions daily. For many small businesses, weekly or semi-monthly is fine! Whether you do it yourself or delegate (outsource) it to others, keep your records up-to-date. Timely record keeping is often more accurate and leads to better decisions, fewer customer complaints, faster payments, better inventory management and happy vendors who will go the extra mile!

#2 – Reconcile Bank Account. In managing cash flow, some owners rely on their online bank statements or balances. This can be problematic because it doesn’t include pending payments. But even with technology today, errors can still occur. You can uncover problems quickly with a monthly reconciliation. If you use QB online, you can automatically upload transactions from the bank to monitor transactions. 

#3 – Manage Credit Cards and LOC’s. Because it’s easy to download credit card transactions right into Quick Books, some use this method. If you do, make sure transactions are properly posted to the right accounts or customer jobs and and amounts are accurate when doing your monthly reconciliation. Don’t assume.

#4 – Invoice Customers Quickly. Why wait a week or more to bill a customer? With online invoicing and smartphone credit card capabilities, you can bill from anywhere. The sooner you bill, the sooner you get paid!

#5 – Use Time Tracking. While we associate time tracking with companies that bill by the hour, any service business can use this tool to help evaluate labor costs associated with customer jobs. From lawn care and cleaning services to plumbers and HVAC services, knowing this information can be helpful when setting prices. More important, it can help you improve efficiency that impacts profit.

#6 – Measure Job or Customer Profit. Stop wondering if you made money on a project or customer. Quick Books allows you to capture both income and related expenses, including labor and materials, at the project or customer level. Would knowing this information help you price more effectively or focus on certain projects or customers? The answer for most business owners is yes!

#7 – Use Reminders. You can ‘memorize’ transactions and set low-stock inventory levels to trigger reminders. This is helpful for bills that occur periodically, tax payments, important or rarely used materials that have long delivery lead times, and future invoices for recurring customers or payment plans. It saves time and money!

Reports To Find Profit Leaks

In addition, Quick Books has a lot of different reports to help you manage your business and find some hidden opportunities for improvement, Most reports include a prior year comparison, helpful for looking at trends! The P&L or Income Statement is used by most owners. But what about the Balance Sheet? It provides a snapshot (balances) of your assets and liabilities, including bank accounts, credit cards, LOC, accounts receivable, accounts payable, payroll liabilities, inventory and more.

Depending on your business or what you uncover on your P&L and Balance Sheet, you may want to dig deeper. And Quick Books makes that easy too. Some of my clients find these reports helpful: A/R or aging reports, sales summaries by customer or representative, inventory report and job/customer profitability reports.

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