Bookkeeping tips

Take full stock of your expenses.Have a full list of all current and expected expenses. Have a complete understanding of expenses before cutting costs.

Do a “worst-case/best-case” break-even analysis.Before you even start thinking about cutting costs, you need to know your prospective break-even point (BEP) by performing a break-even analysis.A break-even point is the sales balance point in which your total revenue equals your cost, which means – the point where you are not making any profits, but also not incurring any loss.The formula is quite straight-forward: fixed cost/(price-variable cost)=per unit soldBy putting the different numbers in the formula, you know how many units of product and at what price you will need to sell to reach your break-even point.

Know where to cut.It is best to take into account the specific characteristics of your business when deciding where to put the emphasis while considering the following:Fixed costs are often harder to reduce, as they consist of long-term, harder to reopen commitments, such as leases, insurance policies, et cetera.Variable costs are more intrinsic to your revenue, and they are generally viewed as easier to cut.

Cash flow is everything!Ask an accounting professional to perform cash-flow projections and cash-flow analysis to help you make more knowledgeable decisions to improve your cash-flow.Almost obvious, but still worth mentioning: Make sure you pay as late as you are allowed to buy your payment terms, without the risk of late payment.Try to renegotiate payment terms with your vendors, or “shop” for vendors with better payment terms, if possible.

Get paid as early as possible. Make it easy for your clients to pay you. Offer early payments discounts if you can afford it.Implement a payment scheduling system to make sure you optimize your payments and move your Accounts Payable and Accounts Receivable to an online payment platform to reduce payment lags. Opt to use ACH payments over paper checks when possible.

Look into government/private financing options (such as the Paycheck Protection Program.Use credit cards when possible to pay vendors to defer payments to the next billing cycle and enjoy the extra float. Look into services that enable you to pay vendors with a credit card, even if the vendors don’t accept them.