Why spending 10 minutes MORE per day on your finances is critical

In my last blog post, I ranted a little about how businesses aren’t spending enough time in their finances. Look, I get why we don’t: As business owners, we’d rather be selling and building our businesses than breaking out the calculator and sweating through spreadsheets.

In this blog post I want to talk about how and why 10 extra minutes a day might make a huge difference in your business’ financials.

• Rather than just entering data (which can be delegated!), you spend more time thinking about what’s going on in your business.
• With a few extra minutes each day, you’ll become deeply aware of your expenses and the impact they have on your business. Do you really need every item you actually have? A careful look at what you’ve bought and how you’re using it will tell you. And if you’re not going to use something that you’re currently paying for, get rid of it so it’s not an expense.
• With a few extra minutes each day, you’ll see how income comes into your business and is distributed through the various parts of your business that need the income to operate, and you’ll see how minor adjustments in that income (i.e., by increasing sales or raising prices) can make a big impact.
• With a few extra minutes each day, you’ll be able to give just a little more attention to payables, paying bills on time rather than potentially incurring late charges and interest.
• With a few extra minutes each day, you’ll be able to give a lot more attention to your receivables, calling people who owe you money to see how and when they will pay, thereby improving cash flow.

Schedule this additional ten minutes of financial review per day. It won’t seem like much more time but you’ll dig into your finances and, over the weeks and months that follow, you’ll have a deep understanding of your finances and their impact on your business.

Jessica Routier, IAC-EZ

What do you spend your money on?

IAC-EZ clients tell us that they sometimes like reviewing reports – like the Profit & Loss Report – that tell them what they’ve bought and how much they’ve spent. But sometimes they don’t like to review them because they can often reveal that we’ve spent more than we intended to on things we may not really need!

It’s no different than going to the store and feeling great about your purchases until you get home and look at the receipt one more time.

Recently, I stumbled upon an info graphic (it was referenced in this blog at AllTop but the entire graphic originated at ripetungi.com). The graphic, although focused on the UK, is a fascinating study into how much people spend and how much of that spending was in cash.

Having traveled to the UK, I can anecdotally assert (and this image backs up my assertion) that Americans use credit cards far more frequently. With that one exception, I suspect that spending habits are fairly similar across national boundaries.

How do your buying habits line up? If you were to do an info-graphic of your own spending – both personal and professional – how would it look?

While seeing numbers on a Profit & Loss Report is sometimes a wake-up call, they’re just numbers and it’s easy to overlook their comparative sizes. But when you look at the overall spending on a graphic like this that incorporates size, it becomes far more telling… and perhaps even alarming.

Jessica Routier, IAC-EZ

No More Mr. (or Ms.) Nice Guy

As a small business owner, you may generate a list of receivables each month from people who don’t pay in full prior to receiving your goods or services. This might work as a business model for you but there is a frustration you may face at the end of the month when it comes time to collect.

For some of your invoices, collecting quickly isn’t a problem. You invoice, they pay, and their presence on your receivables list is just because the check didn’t get to you before you printed out your receivables list.

But there will be some on your list who don’t pay. (Because they can’t or they won’t; it doesn’t matter why).

When your receivables list prints out for the previous month at the beginning of the month, what should you do?

The Small Business Info Canada site at About.com has great advice: “Be impatient”. (You can read the full article here, and there are additional links you might find interesting).

This is great advice. Of course you don’t have to be rude or unprofessional, but you should get on them right away. Follow up with an email. Follow up again the next week with another email. Keep it short and professional with something like: “I’m checking in on the status of my outstanding invoice.”

If you do this right away, you’ll collect more, more often, and you’ll have a really short receivables list.

The problem is that people are too nice. “Oh, I won’t bother them. I know they’re busy,” or “I want to be a low maintenance vendor”… and so on. When this happens you devalue your own work, you risk the longevity of your business, you may even create cash flow problems for yourself, and you let clients slip through the cracks… some might not pay simply because they forgot and then, by the time you get around to asking, they’re on to something else.

My friends: You have a right to be paid for work you delivered! There is nothing wrong with following up on money owed! Don’t think that calling up the people on your accounts receivables list is being the “bad cop”.  Accounts receivables and collections is a spectrum… on the one side you’ve got the nice and professional person you normally are following up on outstanding invoices. No big deal. Slowly, as payment becomes more and more delinquent, you can move them along the spectrum, raising the heat, increasing the pressure, and (someday) sending them to a collections agency. But it rarely has to go that far!

Jessica Routier, IAC-EZ

The Money Game

I remember playing the Game of Life when I was a kid. You had the chance to pursue two career paths and, as I recall (but it’s been a while) one career path was for those who wanted to become lawyers and doctors and make a lot of money every payday and the other career path was for the rest of the working class schlumps. After college you married someone, got a job, got a house, and got fire insurance. I’m laughing just thinking about that game and the 1950’s Leave-It-To-Beaver mentality it promoted.

Now that I’m an adult, I enjoy other games – like poker. When I saw this article “Poker Style Reveals A Lot About Your Finances“  it made me realize that life is probably more like a poker game than the Game of Life.

In the article, Gina Roberts-Grey reveals 4 types of poker players and draws the parallel between poker playing style and financial management style. I like that she doesn’t just do a tongue-in-cheek style of parallelism here but actually offers useful advice to each type of person. Even if you don’t play poker, you’ll probably find yourself in this list.

The more I think about it, the more I realize how much our financial situation is very much like a game of poker. While poker is a game of skill rather than a game of luck, there is still a small element of luck involved in the cards you receive and whether or not you’ve been dealt a 6/7 off-suit or the Ace/King suited with a matching 10, Jack, and Queen in the flop. (Did I just lose some of you in that?)

But even if you get a poor hand, you can still play and do well, provided that you manage your situation carefully. And in life, you may not have been born with a silver spoon but you can work your way up the financial ladder by carefully managing your situation.

Jessica Routier, IAC-EZ