A Bookkeeper Answers How to Recover a Financial Loss

No matter how successful your business or finances are, you will likely experience a loss. The loss may occur all the time or once in a while. No matter the situation, we will share how to recover a financial loss.

1. Lack of Knowledge

One of the biggest issues we see is that business owners have little to no idea on how much is coming in versus going out. This makes it impossible to deal with losses you are never made aware of. In fact, these may be reoccurring losses that can ruin your whole business in a matter of months.

Solution: We HIGHLY recommend having your books done regularly and accurately in order to identify a loss immediately in order to develop the correct strategy. Use a professional bookkeeper to either help you set up your books correctly and do them yourself (where few transactions are done), or have a bookkeeper do your books each month.

Did you know? Only 26% of small business owners would label themselves “very knowledgeable” about their finances? Source: Hiscox

2. Identify the Loss

Many business owners see the money coming in but don’t see it profit-wise. This type of financial loss can be due to:

Unpaid or underpaid invoices that read as paid.
Payment has been received but not processed or is unable to be processed.
Funds have been set aside for other expenses such as taxes.
You are being double-charged or over charged for services such as a utility, external contract, or other service.
An unexpected increase in a bill such as insurance, taxes, or other regular expense.

Solution:

Confirm which invoices have been paid and which are outstanding.

Confirm all payments and amounts, dates, etc.

Set a predetermined amount to set aside each month for upcoming expenses. Consider a high yield savings account to accrue interest on these funds.

Review all reoccurring charges to see which are legitimate.

Shop around for necessary items and use a professional to help minimize your tax liabilities.

3. Do You Have Inaccurate Numbers

Just one slip of the finger or mind can lead to inaccurate numbers and disaster. However, there is always documentation of transactions such as credit card purchases and payments, bank statements, online transactions, and more to confirm your numbers.

Solution: Check your profit and loss numbers each Monday morning, or whatever you consider to be “the first day of the week.” Compare it to last week, last month, etc. Does anything jump out? Is anything too expensive?

Did you know? About 45% of small businesses rank manual invoice review as first among 18 other problems. Source: PYMNTS

4. Stolen Funds

Unfortunately, we live in a world of predators that can invade your business from inside and out. The most loyal employees can get weak when in the face of “easy money” and resort to pilfering from the company – and we don’t mean a box of pens here and there. The courts are full of workers who were able to pilfer thousands to millions from their respective employers before they were caught. Additionally, scammers are constantly trying to milk gullible business owners for their private information and a quick buck.

Solution: Use a bookkeeper or other professional to watch your books, as well as valuable items such as payroll. And be sure to read up on the latest scams to stay ahead of it all.

5. One Time Losses

Finally, all businesses may be susceptible to one time losses due to random events such as a natural disaster, recall, lawsuit, or even incorrectly filing your taxes. These are the kinds of losses that can destroy a business so it is best to be ready.

Solution: Make sure all of your insurance is accurate and paid. It can help cover many financial losses. Be prepared to lean on other goods and services should a recall happen on your main source of income. A financial loss via a legal settlement or back taxes can usually be negotiated to offer a reasonable payment plan and interest rate, as well as a lower amount in some instances.