In all business sizes, there are plenty of hidden costs, and that can be a huge problem. The money you have set aside based on your calculations could be cut short because of these unexpected costs.
Here are 8 way to can be better prepared for all the hidden or not too obvious costs of a start-up.
1. BOUNCING CHECKS – A check marked with non-sufficient funds mean that there isn’t enough money in the person/company’s bank account to pay you. There are various kinds of bad checks, so the best thing to do is double check who or what company issued the check.
2. CHECKING CREDITS FOR FRESH CLIENTS – A Checking Credit is good when dealing with a new store. It’s your responsibility to follow through their credit history and see whether there is a record of complaint. I wanted to name a few large scale companies here that I’ve come across with as having bad credit history, but I’ll reserve that some other time. You’ll need to pay a small fee to verify a potential buyer, but it’s totally worth it for large deals. If you have your doubts, ask for a significant deposit (30 to 50%) or do cash on delivery.
3. MANAGE YOUR PRICE REDUCTIONS OR DISCOUNTS – I know that these 2 are a great way to make profit for your business, but they need to be tracked down and analyzed to determine if they are best used. A chargeback of orders, such as shortage of order, wrong tagging or wrong manual inputs sometimes could be resolved by offering price reductions or discounts.
4. LATE PAYMENT INTEREST CHARGES – You could be dealt with this by your suppliers for missing a payment deadline. Late payment of invoice charges are around 1.5-2.5% monthly and 18-20% annually. That’s heavy.
5. CHARGEBACKS – Track your sales results to get a better understanding of any possible potential chargebacks to your company.
6. CLEAR OUT ANY DEAD STOCKS – Any stocks in your warehouse that you don’t need could be costing you much more in storage than the actual worth of your products! Check them regularly.
7. ATTENTION TO SHIPPING TERMS – Logistics is costly for business, so it’s important to be clear on your shipping terms and conditions, including both parties’ responsibilities. These shipping costs eat up your profits without you realizing them. I’m speaking here from hard experience when I say this.
8. IDENTIFY SLOW PAYING, ESPECIALLY NON-PAYING CUSTOMERS/CLIENTS – Until such time that your customers/clients has put your money into your bank account, YOU HAVE NOT BEEN PAID YET. Read that again.
It’s important to be vigilant when it comes to monitoring any hidden costs in your business, so you don’t get any surprises given to you by your accountant or when you do your bookkeeping.
Question of the day: Have you experienced getting charged for something that you didn’t expect for your business?