Reviewing your annual spending is a crucial business practice — especially when a year as trying as 2020 comes to a close. In doing so, your operational expenses are an essential factor to consider.
In the course of a year, it’s easy to chalk various subscriptions, expenditures, and policies up to growth or marketing expenses. However, these costs can quickly pile up to painful levels.
Doing a regular audit of running expenses helps you keep on top of your business finances. It will help you take stock of all your running expenditures — and cut back on costs. You’ll be able to exterminate hidden business costs, cancel subscriptions you no longer need, switch to cheaper providers, and pick better policies.
Here’s a primer on how to prepare to audit your running business costs.
1 – Round Up Your Financial Accounts
To start with, make a list of all your accounts with banks and payment platforms like PayPal and Stripe. Then, export or print statements from the past year.
That way, you’ll be able to scan them for regular outgoing payments. You can then cross-check these payments with invoices you get from various providers.
Plus, you’ll be able to get a better handle on when particular payments go out.
2 – Scour Your Inboxes
Next, assemble all invoices and information related to contracts and subscriptions that are scattered across your virtual and physical mailboxes.
Chances are that you have at least a few email addresses you use for business. Not to mention the ring binders you use for filing away paper invoices and contracts that you get via physical mail.
To prepare for your audit, make sure that you have all the necessary information in one place. That will make it easier to check for duplicates, and arrange all the data in a consistent timeline.
3 – Assemble Contracts and Policies
Once you’ve rounded up your outgoing costs — and the associated invoices — track down the related contracts and policies in all their fine-print glory. You’ll need this information to assess the value of these running costs for your business, and to compare alternatives.
For example, insurance policies will have detailed information on what eventualities and amounts they cover, from public liability to professional indemnity. You might discover that a policy you took out years ago no longer matches your current business needs — or that better alternatives are now available.
4 – Go Through Your Subscriptions
Another crucial element is to go through all your subscription accounts. These days, many business functionalities are cloud-based, from accounting to business telephony.
Get all the info you can on your platforms — what the other subscription options are, when your subscription auto-renews, and what viable alternative providers are out there.
5 – Set Up an Accounting System and Calendar
Finally, consider setting up an accounting system and calendar if you haven’t done so already. This will make it much easier to file away and categorize all your business expenses — both one-time and running ones. An audit is the perfect opportunity to transition to such a system, since you have all the info in one place anyways.
Auditing your operational expenses is an essential part of staying in control of your company finances. Doing this regularly avoids unpleasant surprises — especially in economically trying times like these. Overall, this will help your business move into the new year leaner and more resilient than ever.
The post 5 Steps to Prep for Auditing Your Running Business Costs in 2021 appeared first on Home Business Magazine.