How conscientious are you about getting your car tuned up on a regular basis? Getting your kids to make scheduled trips to the dentist? Having your annual physical exam?
If you’re like most of us, it’s just too easy to let these often-unwelcome-but-necessary occurrences slide. The same goes for the annual financial checkup for your small business. But, now’s a good time to make it an annual, not-to-be-missed event.
Here’s some of the basic rationale behind an annual financial checkup, according to Webster Bank’s online blog, The Bank Roll. For most small business owners, no two years are alike; every year brings new challenges and opportunities. So your approaches to things like cash flow management, collections and disbursement may not (and probably won’t) hold up from one year to the next. In reviewing your strategies, you’re bound to find some opportunities for fine-tuning.
A good place to start: Your CPA.
Are your financial tools up to date? Are you taking full advantage of online banking and mobile applications that help you to be more efficient and perhaps even save you money? And speaking of money, you’ve got to include a review of fees you’re paying, along with interest you may be earning every year as part of your business’s annual financial checkup. Banks offer businesses a number of ways to offset fees and to make sure your cash reserves are working as hard as they possibly can. Something as simple as having your reserves “swept” into an investment account overnight and “swept back” into your checking account the next morning can make an impressive difference in how your unused funds can be maximized.
An important part of your annual checkup should also include a thorough review of your credit situation—loans, lines of credit and credit cards. Small business owners are often surprised how much their credit needs and uses change from one year to the next. Likewise, your technology tools, especially those designed for security and fraud protection. Online fraud and security breaches are continually occurring—and morphing. Small businesses may think they’re adequately covered by a bank’s fraud protection. But that’s a common misconception: Account security and fraud protection are shared responsibilities between the small business owner and the bank.
But an annual checkup can also do much more for your business than a financial tune-up. Smart Business Network (sbnonline.com) recently published How to Achieve Your Business Goals by Conducting an Annual Financial Checkup, which featured an interview with Pamela Campbell of California Bank & Trust. Campbell emphasizes the competitive advantages that small businesses can gain by learning to rely on a good relationship with professionals who have specialized financial expertise. She naturally suggests a banker, but this can also be an accountant or a lawyer. These relationships should be evaluated periodically to ensure not only that your current needs are being met but even more importantly, that your business objectives, goals and future aspirations are fully understood and being attended to. You also need to determine if your trusted advisor’s vision, policies, philosophy and resources are aligned with the direction in which you want to take your business.
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