It can be hard to determine how spending money ultimately creates value and wealth within a business, but profitability is much more than just revenue minus the expenses. Outsourcing your bookkeeping to small business bookkeeping solutions is an avenue that saves time, increases overall revenue as well as maximising profitability of your business.
Cost of Opportunity
When an owner or an employee within a business is spending time doing the books, every hour spent doing them is an hourly wage and a lost opportunity cost of revenue-building work they could be doing.
As an example, as a business owner, you may be paying yourself £50 an hour, and if you spend 10 hours preparing your books each month, that is a £500 cost to the company – and that does not account for what you are worth to the business being lost. The time lost is in creating new deals, getting contracts, increasing your client base and spending time to make your employees more efficient – that could end up being thousands of pounds of lost revenue due to your time being occupied on your books.
There are always unforeseen expenses in any business that can end up being the cause of your business hitting the red. If you have one or two months of this within a certain period, this will be a trigger for banks and investors.
Banks look at a business’s bottom line to access risks should the business be seeking a commercial loan or a line of credit. The bank may deem the business to be too much of a risk with inconsistency in the bottom line. The same goes for investors entertaining an acquisition. Any major fluctuations in the bottom line can impact the price they would be willing to pay to purchase a business.
This is where outsourced bookkeeping services can play a pivotal role in helping a company get back out of the red.
Fine Tuning Expensive Processes
If you have outsourced bookkeeping services in Manchester, you will have an independent body that recognises cost increases and diminishing profitability month by month.
Many things go unnoticed by business owners as they think they may be small, but they certainly mount up and, when presented to business owners, it can be a huge cost to the business. Outdated software licences, direct debits still being paid past their finish and missing receipts are things that most commonly slip the minds of a business owner, but they all add up to a considerable loss.
Some owners don’t even realise when prices have gone up on subscriptions or on services that they pay out to every month. Experienced bookkeeping services are a helping hand to save on your expenses and subscriptions.
Still think a bookkeeper is not a worthy business expense? Contact the team at Pebbles Bookkeeping today to outsource the things that are costing your dearly, and get help maximising profitability for your business.