Hidden revenue refers to additional money a business earns but does not include in financial statements. There are many reasons why this revenue can stay hidden. Some include not understanding revenue, poor accounting practices, and incorrect transaction recording.
Whatever your reasons for having hidden revenue, it might affect your business’s profitability. The more income you track, the better your cash flow might be. Start with these actions below to unlock hidden revenue and bolster your business’s bottom line.
Get Experts Involved
Sometimes, the key to improving your internal finances starts with seeking help from experts like CFO Dynamics. Financial experts can identify hidden revenue, help maximize the return on your investment, increase your profits, and generate more cash. Sometimes, all it takes is a fresh perspective and financial expertise, and you might start seeing a healthier bank balance.
Identify Possible Sources
Before you audit your internal processes, it might help to know where you might find lost money. This might speed up the process. Often, businesses find it in unclaimed rebates and tax credits, assets they could be renting out, and interest and late fees. There might even be money in lost billing opportunities, unreported income, lost inventory, and lost opportunities for upselling. Once you have a list of all possible untapped revenue streams, you can create a plan to take advantage of them.
Study Your Financial Statements
Identifying your business’s potential revenue streams might put you on the path to maximizing your profit potential. However, you also have to compare those revenue streams to what you’re accounting for on your income and cash flow statements and balance sheets. Some revenue streams are already accounted for but haven’t been used to their full potential. You might only need to make adjustments that paint a more accurate picture of your financial health.
Look for Accounting Errors
Just because you can handle your business’s accounting doesn’t mean your processes are flawless. While you’re on your journey to unlocking hidden revenue, it can be worth looking for potential accounting errors. These can include mistakes in recording your revenue, tracking expenses, or reporting your revenue-generating activities. If you feel overwhelmed, consider outsourcing this task to an expert. There are plenty of competent bookkeepers and accountants who can take over this important job.
Look At Your Pricing Strategies
A lack of accounting errors doesn’t mean there isn’t extra money to be found in your business. Many business owners see the value in examining their pricing strategies to see if they can make more money from their customers.
Begin by studying your competitors, learning how customers buy, and assessing costs for products and services. You might then be able to set new prices that reflect the value of your goods and services and bolster your bottom line.
You might not think you can get any more money from your business, but that might not be true. Involve the experts, study your financial statements, and price your products correctly. You might then unlock more hidden revenue than you thought possible.