CFO Services | Successful Businesses Pay Bills on Time
There are many things that entrepreneurs are learning says CFO services. When they open up the doors to their business for the first time. In one thing that all business owners should get into the habit of doing. Is paying their bills on time, every time.
Often, business owners think a viable strategy. To help increase the amount of cash they have in their business. Is paying their bills late. So that they do not spend all of their money in their business.
Or, they do not pay their bills on time. Because they did not make enough money. But hope that next month, they will be able to pay all of their bills, plus what they did not pay from last month.
However, this scenario is a losing proposition says CFO services. Because if entrepreneurs do not take immediate action. In order to address the reason why they did not make enough money.
They will be setting their business up for failure. Because they will be addressing the reason why they do not have the money. And that problem will continue in the next months.
Instead, when entrepreneurs start off when they are very small. Of paying their bills every month. And knowing what to do if they are not able to pay their bills. Then they will know what they need to do when their business grows.
To stay viable in business. Because they have practised these strategies when they are smaller, and more manoeuvrable. And what they need to do, is understand what their margins are.
So that they can understand cost and gross profit. And if they need to increase their prices, or if they need to find more customers. Or if they need to minimize their overhead expenses.
It might be that not nor has found enough customers, but they are not covering all of their expenses because the pricing is not accurate. Or the pricing is great says CFO services.
But they simply need to find more customers in order to increase the revenue. By learning their finances will they are small, can help ensure an entrepreneur can look at their finances and make these decisions.
However, entrepreneurs also may have unsustainable overhead. And it is very important that entrepreneurs are also keeping an eye on this. Because if they have unsustainable overhead and they do not minimize it.
They are going to take themselves into a deeper hole each month. Because they will continue to run a deficit with their overhead. Which is why they should always pay attention to their bills.
Since overhead counts towards all of the bills that they need to pay. Before they sell a single product or service. Overhead typically will include things like the rent of the office space.
But also the utility bills for the office space as well. As well as phones, Internet and even bank charges and office supplies. However, the most significant overhead expenses will be there administrative staff salary.
As much as it may not make a business owner happy to cut their admin staff’s hours. Doing so may ensure that they can remain viable in business, so that they can have a job later on in their life.
It is poor business practices for entrepreneurs to let their debts pile up says CFO services. Because it can often end up with an entrepreneur in a situation of not being able to overcome the debt that they have.
When entrepreneurs are in a financially difficult position. And they do not increase their revenue, or minimize their overhead expenses fast enough. He can end up putting themselves in overstuffed position then brand-new entrepreneurs are in.
By running their business with more debt than they can possibly overcome. Which is why business owners need to ensure that they are paying their bills in full every month.
And if they are unable to pay them. They will need to find a way to minimize those expenses. Or quickly increase their sales and marketing. To find more customers. To avoid this problem.
One thing that happens if entrepreneurs continue to let their debts pile up. Is soon, they will need to stop paying other things. Such as payroll remittances, or business taxes to Canada revenue agency.
And when this happens, CFO services says that they may never recover from the problems this will create for them. The reason why, is because entrepreneurs will often get hit with severe penalties and fines.
When they are not able to pay their taxes to the Canada revenue agency on time. And the penalties for payroll remittances are especially bad. Being 20% per day for anyone who is late paying this.
Therefore, entrepreneurs can owe thousands more every day they do not pay the government. And if they are not paying Canada revenue agency, because they cannot afford it.
Getting hit with several thousand dollars in fines every day. Will simply make their financial position worse, until they are unable to banish their business any longer. And be forced to close the doors to their business.
And what is even more important to consider says CFO services. Is that if an entrepreneur has been hit with steep fines from Canada revenue agency. And they go out of business.
No matter what they do, they are not going to be able to escape this debt to the government. Even if they go bankrupt, they are going to need to pay the government the money that they are owed.
This is why it is a losing proposition for entrepreneurs to avoid paying the government. If they do not have enough money. And when they learn how to avoid running out of money while they are small.
When an entrepreneur is ready to grow their business, all of the lessons they learned will they were small, will help them stay viable in business as they grow larger.
However, if business owners are having difficulty with this. They can always contact CFO services, to see what they can do for an entrepreneur. To ensure that they are in a better place financially.