Why successful businesses still lose revenue
How tightly does your business monitor every cost, every expenditure, every charge, every business expense? With the right tools in place, it’s easy to keep a close eye on everything and to spot problems quickly – you can also get a much clearer view on the bigger picture too. That’s the ideal – but for many businesses, it’s not so clear cut. In this article we explore the areas where money is potentially being lost.
Technology can make a huge difference to your business finances. Having a company-wide, fully integrated system in place where data is collated from all areas of the business and the financial elements are accurate and fully transparent is an environment that many CFOs would be delighted with. In reality, most are working with a less than joined-up picture where keeping track of everything at once is a mammoth task. Obviously, the goal for every Finance lead is to put in place financial systems and procedures that make it easy to monitor the financial status of the business at the click of a mouse. But if you’re not there yet – there are some key areas to check on where problems can (and commonly do) occur.
Fees and billing
From inaccurately kept timesheets to forgotten charges to simple human error when recording details on timesheets, the list of potential problems is long. But mistakes aren’t the only issue – without a clear view across the fee-earning part of the business, CFOs will find it very difficult to ensure the right resources are being applied to the right customer accounts and that the skills, experience and the revenues generated are optimised accordingly.
Work In Progress
If the amount tied up in work in progress (WIP) isn’t known in real time, it leads to uncertainty about whether projects are actually profitable and generating revenue. As well as employees’ unbilled time, WIP against a project to date can also include unbilled expenses, print and stationery, postage and phone calls – and that’s just for starters.
Credit control
If your customers receive goods or services before you’ve received payment, credit control is absolutely critical to your business. You need clear and firm payment terms with payment deadlines and spending limits. Your staff also need to proactively follow the procedures in place including chasing late payers in good time, following up with reminders, and if required, freezing any further credit until bills are settled. Carrying out credit checks on new customers requesting credit lines is also a core activity. But devising suitable credit control protocols is easy – without an automated system with alerts and reminders built in, the hard part is ensuring they are consistently followed in good time.
Supplier agreements
It pays to periodically shop around - just as most of us do with our personal arrangements for insurance, utilities etc. And regularly checking you are still getting a good deal from your business suppliers of goods, services and materials also makes sense. If you have long-standing relationships with particular suppliers try asking for a loyalty discount instead of simply moving on price as you may find they are keen to retain your business. It’s also good to look for savings by buying in bulk for example. Finally – set a date (at least annually) to remind you to review your supplier agreements and terms.
Pricing
When did you last review your prices? Market value can fluctuate up or down, as can the cost of doing business. By keeping your prices the same for long periods of time, you may find that you are charging less than the market rate. Being the cheapest isn’t always the best for business – especially if your prices are not reflecting the true value of what you deliver. Being too cheap not only loses your business money – it can damage your brand too.
Expenses
From incorrect logging of expense claims to unnecessary business trips or inaccurate business mileage – expenses can be a minefield for Finance teams to manage closely. This is a prime example where business systems can make things much easier, both for the employee making the claim to the finance person processing their reimbursement.
Having the right software in place to support your Finance team as well as your wider business reaps benefits for all. Vastly reduced admin and data entry requirements, fewer errors, enhanced visibility, tighter control: these can all make a difference to your profitability by ensuring there are no gaps for cash to trickle through.
Access Finance software is designed to alleviate the day-to-day issues experienced by Finance teams, intuitively streamlining processes and presenting a clear-cut big picture viewpoint. We also provide a solution for project-based businesses which enhances profitability. Why not talk to one of our Finance technology experts today? You may find we can help make life much easier.
