The impact of a slowing economy has hit our bank accounts hard with the rising cost of groceries, gas, replacement costs of equipment, supplies, utilities,travel … the list goes on.
I just purchased a flight for an upcoming speaking engagement and the cost stunned me. This flight had increased 32% in a year.
So, let’s talk about some of the issues on the table currently and how to manage these issues, perhaps a little different moving forward.
ISSUE #1: INCREASING CREDIT CARD INTEREST RATES.
I have a great credit rating. I pay everything in full on all my credit cards every month. I have not been late on a payment in well over 15 years? And I say 15 years because I really do not remember the last time, I was late. But, it has not always been that way until I realized how much money was wasted in thelate fees and finance charges.
I have a very low debt ratio. I renegotiated my mortgage loan last year – boy am I thrilled at that now. And I do not owe on my auto because I was trained to purchase pre-owned vehicles. I drive a beautiful 2014 GMC Acadia Denali. I honestly do not need anything newer.
Not much, right?
I just checked one of my credit card’s interest rates and it has jumped up 5 points to 18.74%!
With credit card interest rates almost doubling, make sure you are paying your credit card in full by the due date stated online or the credit card statement or you will be hit with a major additional expense. A fairly large additional expense. And a completely wasteful additional expense.
I can almost hear some of the practices saying that they “charge more with the high cost of supplies than they can pay monthly. What do I do?”
How do you curtail spending?
My first response reminds me of my favorite SNL skit. Internet search it. It’s called Don’t Buy Stuff and stars Steve Martin and Amy Poller. It is hysterical. When you watch it, you will know why.
If you are a professional practice, obviously, you must buy clinical supplies to practice. If you are a contractor, obviously you need to buy equipment. If you are a small business owner, you will have your own specific “must have” tools to generate revenue. What I am saying is to be mindful of what you are ordering. Order once a week. Do not assume where you have always ordered from, has the lowest prices now. Research prices. And do not buy anything that is not needed.
Solution One: Use an official Inventory Order Worksheet.
In my book Money In, Money Out, I suggest keeping a clipboard with a very simple inventory supply order worksheet, hanging in the supply room, so that it is accessible to everyone. I include access to that sheet as well as many orders on a website hidden page when the book is purchased.
This list keeps everyone and every ordered thing accountable for the clinical supplies in their area. Way too many times I have seen daily ordering of supplies as a kind of knee jerk reaction. Or priority shipping charges applied when if there had been some thinking ahead, could have avoided the additional charges.
Try the worksheet. It sounds too simple but in the long run, if it saves some hard-earned money for your business, is it not worth implementing, at least trying?
And if the economy does tank, you will be glad you already have an inventory system in place that makes sense.
When the pandemic hit, I heard from practices that finally had the time to work through what their credit card charges were monthly. Some found they were being charged for a service they no longer used. Some found they did not actually need a service and cancelled the service.
The point of this is that they took the time to evaluate their charges, to evaluate the overall expenses. This is a lot harder to do when you are outsourcing the bookkeeping, but you can request detailed reports from the person doing the bookkeeping.
Some could save their practices or small businesses large sums of the cash flow if they would simply take the time to evaluate what they are spending their hard money on.
Wouldn’t it be nice to have more money left over at the end of the month, rather than worrying about the dwindling bank account balance?
Solution Two: Auto Pay Weekly
My second solution is to set up a weekly auto pay with the credit card if you are struggling to pay it off every month. How? Glad you asked.
Take the last four months of charged totals – this is how much you charged each month. Divide that total by the number of weeks involved in the months. Increase the weekly amount by $100 and make that a weekly auto payment amount with your bank.
Let’s say I own a dental practice and the last four full American Express credit card statements shows charges equaled $14,700. Take that amount and divide by 4, which equals $3675 a month. Then divide number by 4.3, which is basically the number of weeks in a month, and that equals $855, rounding up.
So, if you wanted to, you could set up an autopay, every week, for $855, or round up another $100, and make it $955 a week, that is auto drawn from your bank account.
There may be only a little remaining balance or a little credit, and it may take a few months to tweak it but where there is a will, there is most definitely a way to make it work so you are not paying incredibly high interest rates on your credit card charges.
That money is better spent, so to speak, in a savings account, which is next week’s blog post.
If you are not concerned about the full amount being withdrawn once a month, set the credit card to pay the balance due every month.
All of this requires you to be intentional and accountable.
For the past few years, I have been recommending auto paying the monthly credit card bill. I did this because so many were being hit with finance charges when they forgot to pay the bill. That forgetfulness will be an even more expensive in the future.
Have you been slack about paying the full amount every month? That’s a bad habit that will cost you greatly.
I know some who run up their credit card for vacations and pay off the card in time. That will cost more now too.
Downloading the credit card charges into your accounts payable software, whatever you are using, will give you great oversight into what is being charged. By setting up auto pay, you are just ensuring you are not paying hard-earned money that could have been saved…which leads me to Issue #2 next week!
Increasing credit card rates can take a big bite of your bank account should you not pay the full balance due monthly. Save $$$ by being diligent to not overspend as much as possible so that money is not wasted on credit card finance charges.
Full Disclosure: I am not a CPA nor a Financial Advisor. I am simply a Financial Organizational Expert who does everything she can to help you to be mindful in protecting your hard-earned money, by whatever is necessary and applicable.