Do you have a clear idea of your corporate financial goals for next year?
Perhaps more importantly, do you know what you’ll need to do to achieve them?
As we enter the Christmas countdown, now is the perfect time to reassess your company finances and set plans in place to improve your financial position in 2022.
Here are 5 things to consider.
1. Eliminate unnecessary spending
Firstly, examine your monthly expenditures in 2021 to see where your business spends most of its cash. You may be surprised by the results.
Some expenses are inevitable, of course. For example, wage bills, office rental fees, and energy bills are non-negotiables. However, after reviewing your balance sheets, you might find that some of your hard-earned cash has been going towards unnecessary subscriptions. You could discover that your team’s travel expenses are way above what you expected (in which case, it might be time to encourage virtual meetings wherever possible).
You should also review the costs of your utilities and insurances. If you have let your agreements renew without comparing what’s on offer from other providers, you could make savings by switching to different services and packages elsewhere.
2. Set your monthly budgets for Q1
Many firms fail to accurately record their incomings and outgoings on a monthly basis. But without tracking how much your company is earning and spending, it’s impossible to have complete control over your finances – and it’s easy to fall into bad habits that could have a significant impact on your company’s overall profitability.
As we move into the New Year, be sure to set monthly budgets – and communicate these to your staff to reduce the risk of overspending between departments. We would recommend reviewing these monthly budgets on a quarterly basis so you can take into consideration any changes in your micro- or macro- environments that could affect your cash flow.
3. Review any outstanding debts
This is particularly important if you have been relying on high-interest business credit cards or loans to keep cash flowing in recent times.
You should be doing everything you can to settle your bill in full every month. It’s the only way to avoid substantial interest fees and other charges. However, if this is not currently possible, it could be worth investigating whether or not you could transfer the balance to another provider with a more attractive introductory deal to reduce your interest payments.
4. Consider whether you really need your office space
Some businesses need dedicated work environments in order to function correctly. However, many companies are increasingly finding that they don’t need a physical HQ for their staff – especially since the coronavirus pandemic has accelerated the move into remote and hybrid working.
The rent/mortgage fees and running costs associated with keeping an office are likely to be eating into your margins. While now might not be the time to abandon your workspace entirely, perhaps downsizing would be a good option if your employees feel they don’t need a dedicated working space any longer. You’ll find more advice on finding a smarter (and more affordable) way of working here.
5. Invest in improving your systems
It’s easy to focus on the here and now, without thinking about how you could be improving your systems, processes and teams for better inefficiencies moving forward.
But what if you could introduce better CRM software that automates many time-consuming tasks and makes managing your customers much faster and easier?
What if you could move away from outdated payment models towards more flexible and affordable agreements with card payment companies like SumUp or iZettle?
What if you could invest in new equipment that will make lighter work of your production or manufacturing processes?
With a little vision – and some investment – you could transform the way you work for greater efficiencies and increased profits. Be sure to factor new technologies into your 2022 budget (if finances allow), as changing the way you operate could set you up for a much more financially productive year ahead.
For more guidance on setting realistic financial goals for 2022, please contact the financial consultants here at Dartcell.