Q: I’m in the process of creating my business budget for 2020 and realized that there’s an area where I need a lot of work: recurring expenses. Especially for costs where I am billed monthly, I completely lose track of who I’m paying and when. The bills withdraw automatically, and I have been dangerously close to being overdrawn on occasion. Please help!
A: This is an excellent question that many business owners struggle with, so I appreciate your openness and honesty.
I am thrilled to hear that you are working on a budget! Your question tells me that it’s also time to start creating systems to track your expenses so that you won’t be in this predicament next year. Here's what to do:
1. Know what you owe.
Part of the beauty of creating a budget is that it requires you to take a look at all of the financial aspects of your company. Those expenses that you say surprised you? Be sure to track the item, amount, and vendor. Having this data will arm you for the future.
2. Know when you owe it.
Rent is due on the first of the month. The electric bill is due on the 10th. Being an adult means that, whether or not we are physically writing checks, we are familiar with the payment cycles of our bills--and the ebbs and flows of our income. Once you’ve listed out all of the expenses you have on a recurring basis, laying them out in order by the order in which they are due will be helpful.
By the way, if you need a template for the budget you’re building, here are some template options for you.
3. Monitor your finances.
There’s no way around it--managing your business finances is an area where you’ll always need to be active. Creating a budget is essential, and that means also staying aware of your spending to make sure you’re hitting your goals. It also means that you can identify and solve any issues with irregular spending or fraud quickly.
There are a variety of tools designed to help you do precisely this--experiment and find what feels right to you. If you know you’re more likely to stay on track if you can use a tool on your phone, then go with that. There are a wealth of options--sorry, I can never pass up a good accounting-related pun!
4. Watch out for free trials.
Every business has the right to market itself--that’s how all of us stay afloat. However, if you’re attracted to what they have to offer and sign up for a free trial, be aware to get all of the details up front.
First thing’s first--set an alert on your calendar to remind you a few days before the trial is due. This step builds in a buffer for you to cancel the service within the window of your free trial period.
If you like the service and decide to sign up, be sure to note the monthly amount and when it’s due and add it to your spreadsheet!
Staying top of your recurring expenses is a microcosm of managing your finances overall. You need to be organized in order to know what to expect and hold yourself accountable to your budget. Getting your systems in place is the hardest part. From there, be sure to set up some “us” time with your finances to make sure all is right in your relationship, and you are set!
Happy Holidays, and best of luck to you!
Photo by Christina @ wocintechchat.com on Unsplash