For any business, money is the key to survival and success. Getting your finances right is of paramount importance. Errors could be very costly. However, a lot of people often underestimate the costs associated with running their own company. With that being said, read on to discover some of the most overlooked business expenses associated with running a business.
- Credit card fees – Allowing customers to pay via credit card is recommended. After all, customers like to have all payment options available to them when they get to the checkout. Nevertheless, it is vital to note that you will be charged a fee for every credit card payment made. This is usually around three per cent of the total charges, yet it does depend on the credit card company in question.
- The cost of equipment and maintaining – Most business owners will recognise that they need equipment, like CNC machines for manipulating machine shop tools. This much is obvious. But one thing they fail to take into account is the maintenance of this equipment, as well as any equipment that needs to be purchased in the future.
- Time – You know what they say; time is money. Nonetheless, this is one of the business expenses that is most often overlooked. This is because quantifying time in terms of money is incredibly difficult. However, it is important to recognise that if your business is not operating as efficiently as possible, then you are going to be losing money. It is as simple as that.
- Payment delays – Cash flow is critical to the survival and growth of any business. If you are going to continue to make money and provide your services, you need money in the bank. However, if your clients do not pay you on time, it becomes incredibly difficult. Payment delays can mean that you rely on your business overdraft, which will typically result in interest charges. This means it is cost you money because your invoices are not being paid on time. It is important to do everything in your power to ensure bills are paid in a timely manner. This includes having clear payment terms, sending invoices out on time, and chasing any delayed payments – not only by email, but over the telephone and in person too.
- Insurance – The type of insurance you require will depend on the business you run. However, all businesses require insurance of some sort. At the very least, you will need public liability and employer liability coverage. It is also wise to carry insurance for injuries, illnesses, property, and negligence.
- Permits and licenses – Finally, when it comes to running a business, it all starts with a lot of paperwork. A lot of business owners make the mistake of assuming that these are one-off expenses, but that is very rarely the case.
All in all, it is of huge importance to make sure that you get all of your finances in order when running a business. You need to have complete clarity of money going out and coming in, and when it goes out and comes in, so you can manage cash flow efficiently and keep everything running effectively.
*This is a contributed post