Leaking profit

How to Plug the Profit Leaks In Your Business

Quick 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.

More Ways to Grow Your Business

For new business improvement articles, exclusive tools and insights on entrepreneurship, click here to subscribe to my monthly eNewsletter.  As a thank you, I’ll also send you my free eBook, How to Profit Through Leverage.


Bookkeeping Tips for Small Business Owners

For most new business owners, bookkeeping is a challenge.  Many don’t like it or find it overwhelming. But like a lot of areas in your business, record-keeping can be learned.  And as you grow, it can be delegated or outsourced.  You’ll have the understanding and maintain control without doing the day-to-day work!

Ready to take control of your financials?  According to Denise Worrell, owner of Your Bookkeeper, here are a few questions you should ask yourself to get started:

  1. How do you want to handle the paperwork flow?  Take a few minutes to write down how you want to handle common transactions like invoicing clients, receiving inventory, paying vendors, capturing credit card or cash receipts, etc.  A little planning here will go a long way.
  2. What method do you want to use for your record-keeping?  Do you plan to do it on paper (not recommended) or use a financial management system, like Quick Books?  Quick Books is the most popular for small businesses for a reason.  It’s easy to learn and use, provides financial and sales reporting including trend comparisons, offers professional invoicing and payment tracking plus a whole lot more.  And learning is a lot easier when you start because the volume of work is lower and less complicated.
  3. When and how often do you want to handle bookkeeping tasks?  Do you want to do it daily or is weekly sufficient?  Will you invoice weekly and pay bills monthly?  There is no right or wrong – but your decisions may impact cash flow.  Decide what is best for you, especially when getting started, and block time off to do it.  Remember, tasks you don’t like are typically not going to get done unless you schedule them!
  4. What do you need to record and keep?  Most owners recognize that income and expenses should be tracked, but are not sure about assets, liabilities, credit card receipts and statements, etc.   Even if you plan to do the bookkeeping yourself, you can consult with a bookkeeper or accountant to help you set it up.

Understanding the financials is not as complicated as some would have you believe.  But it starts with a good bookkeeping method, one that allows you to stay on top of what is going on and make better business decisions.  Give it a try and you too can effectively speak the language of business.

How Do You Measure Up?

Curious how you measure up in six key areas that impact your business? My free business success checklist can help you figure it out.  Click here to access this free download.

More Ways to Grow Your Business

For new business improvement articles, exclusive tools and insights on entrepreneurship, click here to subscribe to my monthly eNewsletter. When you do, I’ll also send you my free eBook, How to Build Profit Through Leverage.