Getting Your Cash Right Before Year End
Q4 usually hits with little notice and we rarely seeing it coming, nonetheless being actually prepared for it, and that’s OK. The important thing is not to be blindsided by the end of the year looming upon us and to take some time to assess what this means. Take a look at your employees, your vendors, your customers, your partners, and notice how everything is operating as a whole. If there are areas that need improvement, prioritize them and start putting those plans in motion so you can tackle the new year prepared and with all your ducks in a row. Small businesses aren’t easy to run and the employees involved are what make it happen so take notice if there are any potential burnouts and address them. Don’t be afraid of Q4, take advantage of it.
Getting more tactical, you need to get your cash right. It’s important to make the most of your cash positioning when it comes to your taxes. If your company files taxes on a cash basis, which is most likely the situation, then the more cash you receive, the more taxes you’ll have to pay, and the more cash you pay out, the less taxes you’ll owe. Deferring cash payments into 2019 can be a smart decision if you are able to do so and can do so legally. Have that conversation with your customers and if they are fine with deferring payment, then you won’t have to pay taxes on those receipts until the following tax year. And on the flip side, if you can accelerate payments, such as invoices, premiums, dues, etc., then you’ll be able to maximize your deductions. Not to mention, your vendors will love you.
Doing this is all about optimizing your cash flow and keeping the most money in your bank account for the longest period of time so you can put it to work. In the end, it’s all the same but a dollar in the bank today is more valuable than a dollar in the bank tomorrow.