Outsourced CFO | Paying On Time Helps You Win
Many business owners run their business by believing that delaying or avoiding paying bills is a necessary part of building a business according to outsourced CFO. However, business owners who are not able to pay their bills on time not only are not helping their business, but they are likely making it worse, and potentially causing their business to fail in the long run.
One of the first things that outsourced CFO says of people who do not pay their bills on time, is that they typically do not know their margins. And when business owners do not know their margins, they do not know how much money they are making, and if they can be profitable. Therefore, if a business owner forces themselves to pay their bills on time, they often can see that they are not profitable, and that they need to either earn more revenue, or drastically cut costs in order to make their business sustainable. However, business owners fall behind on payments, they are ending up delaying this knowledge, and potentially putting their business at risk.
One of the biggest problems that entrepreneurs have, is that they think that they need to sell a lot of products, and grow really big really fast. And while business owners should be concerned with growth, they should focus first on doing their job well, and focus on getting very good Will their small, so that they can understand their margins and profit first. If they scale their business up too quickly, without understanding if their business is profitable, they may be scaling up an unprofitable business, which could end up with them having a business that is fundamentally not sustainable.
One problem that business owners who are behind on bills often have according to outsourced CFO is that they have unsustainable overhead and do not know it. Since overhead is some of the largest costs that a business owner will have, many entrepreneurs have no idea that they could literally double their sales, and not be able to pay for this unsustainable overhead. Every month, they end up losing more and more money, and get farther behind on their bills, but since they are not paying their bills on time, they have no idea that their situation is continuing to be made worse.
One thing that business owners can do when they have in unsustainable overhead, is laced someone off. And while business owners do not want to let their staff down, overhead is usually things like bills, office supplies, utilities and bank charges. But the two largest overhead costs that a business owner will have our administrative staff and rent. While most business owners cannot immediately affect rent, because they are locked into a lease agreement or mortgage. They can change administrative staff. By making this difficult decision, entrepreneurs can tip the balance back to their business being profitable.
Business owners need to understand that they have to be paying their business bills on time. By doing this, they force themselves not only to see how profitable their business is. But they also force themselves to ensure that if they cannot meet bills, that they have to sell more products, or cut costs immediately.
Outsourced CFO | Paying On Time Helps You Win
Business owners who delay paying their bills, are putting their business at risk says outsourced CFO. The reason why 9% of business owners fail, is because they ran out of money. This is literally the second most common reason, and business owners who are not able to pay their bills on time are either making their situation worse, or delaying the inevitable. There are many things that business owners can do when they first start their business that can help them avoid getting into this bad habit.
Ultimately, business owners need to understand that it is the most ethical thing to do, and better for their business in the long run if they pay bills on time says outsourced CFO. If business owners are not able to pay their business bills on time, then it ends up affecting the team, because the employees will see that they do not have to live up to their obligations when the business owner does not. This means that business owners might expect their team to stop meeting deadlines, start slipping on giving great customer service, and they might even start doing their job quite poorly, because they see that the business owner does not of these things as well. Therefore, this is the sort of culture that can completely destroy business from the inside out.
Another reason why entrepreneurs should avoid not paying their bills on time, is because if they end up paying their bills late, chances are that they are going to eventually stop paying their taxes on time as well says outsourced CFO. And not only is it bad to avoid paying taxes, it is especially bad to not pay payroll remittances on time. The penalties are so severe, that this ends at making the situation for the business owner worse. Payroll remittances are especially bad, because these have the steepest penalties that the CRA issues. In fact, if an entrepreneur does not pay payroll remittances correctly or on time, they can be assessed a 20% interest per day charge, which not only is difficult to overcome, but if a business owner is already finding it difficult to pay their bills, being hit with a 20% interest charge per day can be impossible to come back from.
Business owners should get into the habit of paying their bills on time every single month, and if they cannot pay them on time, they know that they need to either increase the revenue, or they need to cut their expenses. However, they need to get into the habit of doing this while they are small, so that when they grow their business they are growing their business while being able to pay their business bills on time. By doing this, business owners will be able to be successful, while paying their bills on time.