Increase Revenue With These 10 Easy-to-Follow Steps
You should have a good understanding of your market and your customers’ needs and motivations, and any new effort to increase revenue should be driven with this in mind.
In an ideal world, your business would never run out of cash. You would have a robust, focused business budget, pay all your bills on time and perfectly manage your cash flow. Unfortunately, the real world is far from ideal. Your bills are due right now, customers are taking too long to pay invoices and you need to stay afloat. It’s times like these that you might consider using your business bank account’s overdraft capabilities.
However, when it comes to “going into the red,” it’s vital to understand and manage your overdraft and other bank charges to minimize what you’ll pay in fees. Here’s our guide to doing just that.
Business overdrafts are convenient, but they can be very costly. If you’re having to use your overdraft capability frequently, it could be a sign of other systemic issues in your business. Make sure you analyze your pricing and expenses to maximize your profit margins.
Take steps now to reduce how much cash you’re losing and develop a healthier cash flow. Overdrafts should really be for emergencies only — if you need to free up cash, a business loan or credit card could be a better solution.
Here are some typical overdraft fees for comparison:
Per Item Fee Amount
of fees per day
fees per day
Bank of America
Fifth Third Bank
Let’s explore what happens if you don’t manage your finances properly and have to go into debt every month. We’ll assume the following:
This is how that looks in practice:
As you can see, even if your business reliably takes in more than it spends, timing can be very costly. In this example, it takes five months to get a stable cash flow. In that time, you will pay out $1,400 in overdraft charges — nearly 2 percent of your gross revenue and 14 percent of your net profit. Ouch!
There are several different types of overdraft fees, which include:
The simplest way to avoid overdraft charges is not to go overdrawn in the first place. But unfortunately, that’s easier said than done! Here are some practical things you can do to reduce your chance of running out of money:
Some banks have low or non-existent overdraft fees. These include:
Remember that regularly going overdrawn is normally a sign of deeper issues with your business. Rather than relying on overdrafts, focus instead on maximizing your profits and building a cash buffer — and consider other financing options as good alternatives.
A bit of research into the best banks for small business could wind up saving you significant money — for instance, nearly half of small business owners reportedly pay unnecessary monthly fees. So consider these options as you determine which bank best suits your small business.
You have to have cash to take care of the fundamentals of your business such as running day-to-day operations, paying employees and making the investments you need for growth.
You should consider much more than which bank is close by or which one you’re currently using to manage personal accounts. Though there are many reasons to a select a business bank, one of the most important is understanding the bank’s overdraft fee policy.