The money your company generates makes a variety of desires come true – whether they are those of customers , suppliers, partners, employees or your own dreams. But this profit only exists when your accounts are up to date, right? That’s why we want to help you on your journey to happiness as an entrepreneur .
Are you paying too much interest on your business and it’s keeping you up at night? You need to sleep well for an effective quality of life. So, keep reading and check out the 5 probable reasons why you’re paying so much interest and how to put an end to it:
1. Organization of daily routines
You arrive at your company and have to stop and think about what your responsibilities will be for the day? Does the customer who speaks the loudest define what you will do first? Is there no process or priorities?
Establishing a daily routine is essential to keeping a company’s processes organized . This way, you can prioritize the most important tasks and avoid forgetting to resolve any daily issues, such as paying a bill.
2. Forgetfulness
You know that credit card bill that arrived last week and you put it on the table? The electricity and water bills arrived and both ended up in the same pile , the one of bills that you will pay. The intention is good: to pay all the bills together and only go to the bank once. However, the due dates are not always the same, and sometimes the bill arrives after it is already due.
Keeping track of your bills can lead to forgetting to pay them. This problem even happens when using a spreadsheet , as it needs to be accessed to see which bills need to be paid on the due date.
One tip to help you never forget to pay a bill is to use a financial management system . Simply register your bills and schedule their due dates . With this process, you will be reminded daily of your expenses and what is due on that date, in addition to seeing your balance in real time.
3. Unknown balance on payment date
Great, now you have your payments organized , but you have no idea how much your expected balance is for that date. What if it’s not enough? Interest. What if you don’t find out in time? More interest.
This is where debit and credit control comes in , so that administrators can predict the account balance on the due date. To do this, it is very important to have a cash flow , where all income and expenses are recorded. It is through cash flow that you will know exactly what the financial situation of your company is .
4. Unforeseen bills
Now, after all this, there is no point in not planning your fixed and variable expenses . You need to keep a history of your monthly or, in the case of annual expenses, your annual debts.
Even with daily control of accounts , we need to make projections and know how much the company will spend each month. How to do this? By defining Fixed Costs , Variable Costs and other Expenses.
For example, water, electricity, rent and salary bills are repeated every month. These fixed costs can be predicted and repeated equally. If in doubt, in the case of variable costs , planning can be done based on the highest value that this expense can generate, thus the risk of paying interest due to this variation will be lower.
With a financial management system, you can organize all of your company’s costs , separated into fixed and variable costs. This way, you will know exactly what the expected outgoings are for the coming months and carry out good financial planning .
5. Financial health
Not knowing how much it costs to manufacture a product, to perform a specific service, or not planning the resale value of a product. This is a part neglected by many managers and, at the same time, crucial for the growth and stabilization of a company .
If you don’t know how much you’re selling a product/service for, you may be constantly making losses without even realizing it. You won’t be able to reinvest this money in the company’s growth and, worse than that, you won’t be able to pay your bills and will be heading for bankruptcy in no time.
So, late payments on top of payments result in interest on top of interest . A snowball effect created by a mistake that seems so small, but is actually very big.