We all know that a Profit & Loss statement tells us how much money we’ve made in that period. But when was the last time that you REALLY dug into all the numbers on that page?
I don’t mean just looking at a line and thinking “that seems high, but we did do a lot of overtime this month”, or “Gosh! We spent quite a bit on stationary this year”. I mean pulling it apart. Taking every single item in that stationary account and fully understanding what it was for, and whether we actually needed it, or if it should have been charged to a client, or even if it is there by mistake.
There are many places in a business where costs can hide, and just not really get noticed. For example, if we expect to see travel and subsistence at a certain level, we don’t question it. But if you really examine that account in detail, you may well find that an expense claim has been duplicated, or a train ticket that wasn’t used hasn’t been refunded yet, or any number of other small anomalies.
Another area that costs tend to creep up without any attention being paid to them is in the area of subscriptions, or memberships fees. We know we have to pay our annual subs for whichever professional body we are a member of, but over the years, we often subscribe to new publications, or clubs, or a new piece of software. In many cases, we just don’t notice them, because they come out a as direct debit, and we are used to seeing that cost in the P&L. But how often do you go through your subs and think “Do I actually still use that?”. This is a good exercise to do in your private finances, not just your business.
This is a particularly important exercise to do when cashflow is healthy, because that is when we tend to just let things go, and not question them. When cash is tight, we often pay pretty close attention to it, so are much more aware of every penny being spent. But just think…. How much extra profit could you be earning, just by paying a bit more attention to the things being put through your accounts? It might only be small numbers, but small numbers can quickly add up!
If this sounds like something I could help you with, then please get in touch. I am happy to have a phone or zoom chat to discuss your requirements and to see if I can help you.