Why is Audit such a bad word that gives people nightmares? I know that most people flinch when they hear the term audit because they automatically think of the IRS or other government agencies but it doesn’t have to be a bad word. Audits are really just in-depth reviews of certain things, usually your expense accounts. You can find out important information if you really look into your accounts.
Accounts that need minimal review
What accounts should you review? Really, all of your accounts should be reviewed on a regular basis. Some could use more insight than others. For example, your utility bills rarely change but during certain times of the years, is your electric or gas usage getting too high or has your internet and phone package been inching up? Your utilities only need a review yearly or seasonally and do not need to be reviewed too closely each month but other accounts may need to be reviewed much more often.
Other Accounts need frequent review
Do you sit down and review your job materials and labor or your vehicle maintenance on a monthly or semi-monthly basis? These can change drastically depending on how busy your business is. Did these accounts go up when you were busy and not come down when your business slowed down? Did some processes quit working for you and are costing you more money now? Have the job costs gone up but your pricing hasn’t? Are your vehicle costs inching up or the gas usage getting worse?
How to use the reviewed information
A great way to make sure that you know exactly where your profits are going is to review the costs on a regular basis. Make sure that all non-used project items are returned and that the credits are actually received. Look to see if your vehicles are not starting to cost more to maintain than they are worth. Other accounts to watch carefully are shipping and freight, can you combine orders throughout the day to meet the minimum amount for free shipping or will a vendor offer discounts or free shipping if you order more of your regular purchases through them?
If you do not know exactly where your money is going, you do not know how you can cut costs or if you need to raise your rates. You won’t know the best way to invest better in your company if you don’t know what isn’t working anymore. Please set up a call with me here if you need help to audit your expense accounts.
