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E-Myth – “Why most small businesses don’t work & what to do about it”

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Outsourced CFO | The Importance Of Paying Bills On Time

Business owners may not realize how important it is to start paying their bills on time early on in their business says outsourced CFO. However, it is very important, because if a business owner can learn how to pay their bills on time when they are small, when they scale up their business, they will scale up the ability to continue paying their bills on time. If business owners are not paying their bills on time, growing their business is just going to scale up the problem, which will result in a lot more problems down the line. Therefore, it should be an entrepreneurs first priority to learn how to be profitable, and pay their bills on time when they are small.

One of the most important reasons why business owners need to get into the habit of paying their bills on time according to outsourced CFO, is because when they are able to do this consistently, they know that they are being profitable in business. It is only when a business owner is not able to pay their bills on time will they realize that they are not either generating enough revenue, or they have unmanageable overhead. However, if a business owner avoids paying their bills on time, they are delaying this realization.

By learning how to pay bills every single month, a business owner will discover if they are unable to meet their financial obligations in one month, outsourced CFO says that they will either have to generate more revenue, or cut their costs. But this discipline will allow them to understand what they have to do in order to be profitable, and ensure that they are paying all their bills on time.

Business owners learn how to pay all their bills, and ensure that they have the profit to do that, scaling up becomes a lot easier. Because all of the habits that they have as a small business, will scale up with them. By learning how to do all of the necessary activities in their business to ensure that they are paying their bills every month, they ensure that they are going to have a profitable business when they grow larger as well says outsourced CFO.

It is also very important that entrepreneurs do this, so that they can make a judgement call if they are able to afford their staff or not. A business owner needs to constantly be asking themselves if they are making enough money to hire people to do it for them? If not, then they are not ready to scale their business up. Because while it is okay, and even expected for business owners themselves to put so that equity into their business, that is to work very hard and not get paid. However, it is not acceptable to ask any staff members to do that. Business owners must get into the habit of paying them. Therefore, business owners who are learning how to pay their bills every single month without fail are getting into the habit of understanding when they can afford to pay people.

Outsourced CFO | The Importance Of Paying Bills On Time

Business owners may not realize how important it is to pay their bills on time says outsourced CFO. In fact, many businesses often get into the habit of paying bills late, that it becomes and accepted culture in some industries. However, this is always a risky move at best, for a number of reasons. Therefore, a business owner will be able to be the most successful that they can be when they realize that in order to be successful, they must pay their bills on time.

One thing that business owners may not be taking into consideration, is that when they are not paying their bills on time, their staff sees that it is okay to not meet obligations on a regular basis either. And when this happens, the company culture is set up to be one of avoiding obligations. Not only does this affect morale says outsourced CFO. But it also shows the staff that avoiding their own obligations is acceptable as well. When business owners avoid paying their bills on time, staff follows suit by not showing up to work on time, leaving early, delivering terrible customer service, not meeting deadlines and doing a generally poor job of the tasks that they are expected to do. This is the sort of culture that will destroy business.

Something else for business owners to keep in mind, is that not paying bills will eventually cost their business more than just financially says outsourced CFO. It will affect a businesses relationship with their suppliers, it will start affecting the businesses reputation, and in the long run, this kind of reputation will cost them in terms of customers as well. Therefore, business owners should learn to run their business ethically, by paying everything and everyone on time, and avoid the bed business due to bad reputation.

When business owners get into the habit of not paying their bills on time, they eventually get into the situation where they are running a larger deficit every month, until they have to start delaying paying even more things says outsourced CFO. It is inevitable that a business owner who consistently is in.able to pay their bills every month will eventually avoid paying taxes. This is extremely bad, because Canada revenue agency is quite ruthless when it comes to collecting on tax money that is owed.

For example, payroll remittances are especially bad to not pay on time, because the penalties are the stiffest that Canada revenue agency hands out. The reason why, is because they view payroll remittances as trust fund money, and for business owner to fail to pay that, is an abuse of the money. Therefore, business owners should expect that CRA will demand payment immediately, and also hit them with a 20% interest on the entire amount that is accrued on a daily basis. Once a business owner finds this is the situation, they generally are not able to recover from this.

Therefore it is extremely important for business owners to learn how to pay their bills on time every month, so that as they grow, they can ensure that they are always profiting. When they always profit, they can scale up their business as large as they want, and know that they will always be able to consistently pay their bills, and have a successful business.