How to Perform an Expense Audit For Your Business Finances

 
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Hello there ladyboss!

With COVID-19 upon us, there is a lot of uncertainty swirling around, especially when it comes to your business and finances. If your business hasn't already taken a hit, you're probably wondering if it will. It's a scary notion, BUT there is a way to help protect yourself and weather this storm, so don't lose hope! Right now is a great time to perform an expense audit. Auditing your current spending habits is a great way to stay on top of cash-flow and cut back on needless spending. Ready to get started? Let’s dive in!


How to - AUDIT YOUR EXPENSES

If you are using accounting software and your books are up to date and accurate (including the names of vendors you are paying), all you would need to do is pull up an income statement (aka profit & loss) and analyze your expenses. You can use the same steps I've listed below, in regards to categorizing essential to non essential expenses, instead of printing out bank & credit card statements, you will pull a quarterly report and click on each category (marketing, office expenses, etc.) to view vendors that you pay on a regular basis.

#1 Grab your documents

In order to audit your expenses, you'll need all of the statements that are associated with your spending habits. This will include any bank accounts & credit cards you currently use. For best results, you will want to print out 3 months worth of statements for each account.

 #2 Set up your expense tracking sheet

For this exercise, you will want to create a quick excel spreadsheet (or google sheet) with the headings used below for each column (A,B,C,D,E,F) at the top of the spreadsheet. I’ve created a sample spreadsheet that you can use if you would like here. You will need to make a copy of it so that you are able to edit it for your personal use. To do that, click on FILE > MAKE A COPY > SAVE OR YOU CAN DOWNLOAD IT AS AN EXCEL FILE.

  • Name of expense (Example: Mailchimp, Acuity, office rent, etc.)

  • Amount paid out

  • Must have

  • Nice to have

  • Nice to know ya!

  • Cancelled

#3 Categorize your Expenses + total your expenses

Next you will want to grab your statements and start filling in your spreadsheet. Categorize each expense as:

  • Must have (essential to the daily operation of your business)

  • Nice to have (makes life easier as a business owner - this may save you on time and allow you to get more done in a shorter amount of time but could do without if needed)

  • Nice to know ya! (these are expenses rarely used, can totally do without, may even be something that you forgot to cancel - subscriptions are usually the most easily missed)

  • Total all of your expenses

 #4 Decision time

Once you've gone through all of your statements and filled in your spreadsheet, take a look at your list of expenses and ask yourself these questions:

What will you be keeping and what will you be letting go of? (in order of importance)

Are there any FREE alternatives to any of these expenses that you can implement for the time being? Can you downgrade plans?

How much will you be saving with letting go of each expense you no longer need? (You can add this amount in your spreadsheet as I have in the sample).

What can you do with the money saved?


Suggestion:

Create an emergency fund - If your business isn't currently effected with a loss of income right now, it would be a good idea to put some money aside in case it does eventually take a hit. To do this, you will want to open an online savings account. High yield savings accounts will earn you more interest than a traditional bank and you can set it up quickly and easily. You can do a google search to find which would best serve your needs. I personally use Marcus by Goldman Sachs. A good rule of thumb is to have 3 to 6 months of money saved.

 #5 Cancel any "nice to know ya" expenses

Once you've decided which expenses you will be cutting out, you'll want to block out some time on your calendar to cancel them. Head back to the spreadsheet and either fill in each cancelled expense, or use the checkbox to track your progress.

**WHEW** YOU MADE IT! Great job! How much were you able to cut back by? Leave me a comment below.


I hope you’ve walked away from this post feeling more in control and empowered after finishing these important steps. If you feel like you need more support, email me at hello@dulynotedfinancial.com to set up a coaching session, I’d be more than happy to help!

Yours in good financial & physical health,

Galynne

 
Galynne Duly