What do you do when you have to pay your employees, purchase stuff for office or for money to keep your business up and running? Dig into your working capital of course. To keep your business running, you need to have a positive working capital at all times, which means well managed AR and AP. Of these AR is tougher to manage, simply because it requires you to depend on others, namely clients and customers. But it doesn’t have to be so tough; learn how you can handle accounts receivable management effectively.
- Research Potential Client’s Financial and Credit History before Doing Business– A thorough evaluation of a potential client’s financial and credit history can go a long way in ensuring you don’t end up in a messy situation. Talking to representatives of other companies they have done business with or businesses that outsource receivables is also a good idea. If you find that the company is in debt and is obviously struggling to make payments, you can act accordingly.
- Clear Payment Terms and Information– Clarity in payment matters is important when doing business. Make sure you and your client are clear on the payment terms and provide an estimate of costs well in advance.
- Use Electronic Invoicing Facilities– How many times have you forgotten to send out invoices? Use electronic invoicing and you won’t have to worry about this ever again. Your invoices can be sent out as soon as your projects are completed and you can also be sure that the invoices reach the client without fail; no more getting lost in the mail.
- Use Multiple Payment Options– Payments may also be delayed if your modes of payment are inconvenient for clients. Offering multiple modes of payment will help to facilitate faster and timely payments.
- Outsource Receivables Management– Proper AR management is vital for your business to run smoothly. If you do not have the resources or time to devote to accounts receivable management, it would be better to outsource it, simply because you cannot afford to have AR ignored. Invest in a good account receivable management company and you won’t regret it.
Over the last decade, employment and staff dynamics has witnessed a lot of change. Aside from a change in the relationship shared by employers and their employees, there has been a change in the way people work- home based workers, contract employees, mobile employees, the options are many. All this means employers have to change their regulations and system; one such change is employee reimbursement, which forms an important part of bookkeeping for small business. All expenses incurred to run your business are business expenses, so all expenses incurred by your employees in order to help run your business are expenses and hence should be compensated. Communication, transportation, internet are examples of employee business expenses. If you cannot provide for all these, you should clearly define what expenses you will reimburse. Let us take a look at some common employee expenses that are reimbursed in bookkeeping for small business.
- Company Travel– Some jobs demand frequently travelling to meet clients, attend conferences or meetings. All expenses that are incurred by the employee when away from home are travel expenses and have to be considered for employee reimbursement. As an employer, it is your responsibility to clearly list what expenses will be covered under this for bookkeeping for small business, for example, lodging, food, transportation etc, and what won’t.
- Insurance– Liability, malpractice and vehicle insurance are few types of insurance that are necessary for certain jobs. If any insurance is needed as part of the job, the company should make provisions for reimbursing the expenses when bookkeeping for small business.
- Communication– Employees today can work from home or work on the go. They will however have to be connected to their employers and team; the expenses incurred in this respect are referred to as communication expenses. Telephone charges and internet costs are generally covered in this. Make sure you think through your communication reimbursement policy and list it clearly for employees.
- Other Types of Reimbursement– We live in a competitive world, whether you are an employee or an employer. As an employer, it is important that you have some form of employee reimbursement in place to retain employees. This can include technology upgrades and incentive plans. To attract and retain good and loyal employees, you have to be able to anticipate their needs and meet them.
The franchisee business is booming; not only is there an increase in the number of successful businesses offering capable individuals franchise opportunities, the number of individuals wanting to start franchisees has also increased, like fast food joints, restaurants, online bookkeeping services. One of the reasons many business owners like the idea of selling franchise rights is that this system allows you to grow your business at a faster pace than you could achieve on your own. If you run a successful business and want to sell franchisee rights, there are a few things that online bookkeeping services companies suggest you ask yourself first.
- Will Your Business Attract Franchisees?
While most businesses are franchise-able, it is not necessary that it will make for a good franchise. For a business to appeal to entrepreneurs, it has to be unique and offer services that set it apart from other similar businesses. Besides, which entrepreneur wants to invest in a business that may not be successful?
- Will Your Business Be Easy To Set Up And Replicate?
When an entrepreneur seeks to start a franchisee, he is looking for something that is not complicated and has clear cut directions. So if you want to franchise your business, you should have a simple system with well documented instructions, procedures and solutions for common problems and issues. It also helps to have online bookkeeping services and other non- core business help set up.
- Will Your Business Succeed In All Locations?
A good franchise will succeed in all locations with a sizable population. Some businesses are successfully in a particular location, but may not flourish in another; if your business is one such, it cannot be franchised.
Franchising is “in”; if you have a business that can make for a good franchise, go for it. However you should make sure you have the infrastructure, like online bookkeeping services, payroll, IT, and a reliable system of checks in place, because a mistake at any one of your franchisees can damage the reputation of your entire business, so know what you are getting into. There are federal and state laws for franchising; read up on them all and take care to follow them. If you do it right, this can be the best thing that happened to your business.
“Should I hire a CFO?” All small business owners ask themselves this question at some point, most probably multiple times from when they started out. Business owners most often do not know much about finances and would love to have someone take over the money aspect like a CFO or small business accountant, but on the downside is the cost- hiring a CFO can be quite expensive. What happens eventually is that you ask yourself the question on and off, but never really take a decision because CFOs are expensive, or at best hire a small business accountant. Because honestly what matters more than saving money when you have a small business going. So, is hiring a CFO necessary? Let’s find out.
What Do CFOs Do?
A CFO is the number man like your small business accountant or bookkeeper; he watches the cash flow, sales and expenses. He can read budget reports, balance sheets, income statements and all the other accounting and bookkeeping reports with ease. Aside from this, a CFO can provide business planning, financial projections, cash forecasts, annual budgets, monthly management reports, manage debts, mergers and acquisitions and more. A CFO is a valuable asset to any company; he can help you develop and maintain strong financials.
How Can CFOs Help You?
- A CFO Understands Money and Its Workings– You can finally hand over the finances to someone who understands it and can manage it better than you, other than your small business accountant. Your CFO will take over financial analysis, accounting, budgets, insurance, banking, AR, AP and legal issues, all of which means you can focus on your business and growing it.
- A CFO Can Ensure Compliance to Tax and Payroll Laws– All businesses have to follow countless tax and payroll taxes irrespective of the size of the business. And as your business grows, there are more rules that you have to follow; now isn’t that a lot to do. A CFO can take care of all this while you, yes, focus on the business.
- A CFO can deal with Investors– Dealing with investors can be difficult and time consuming; a CFO is the person to deal with investors. He can interact with the investors and keep them updated on the company’s performance.
Hiring a CFO is definitely not easy or cost effective, but it is worth it. Our advice to you: hire a CFO as soon as you can afford one; you and your business need it.
There were the days of books and paper when offices had files stacked one on top of the other. Then, came the computer, now you had megabytes, gigabytes and terabytes for storing data; so all you needed was digital space. But that wasn’t the end of it- enter the era of cloud computing, where all your data, online bookkeeping, contracts, payroll data, everything, is safer stored way up in the digital cloud. Now the question, why do you, a small business owner, care about cloud computing? Simply because this technology make your business flourish. How? Let’s find out.
- Greater Efficiency– Save time and resources with cloud based technology. All your data will be available instantly to authorized personnel. You will not have spent time sending or checking data; everyone has access to the same data, whether you are an online bookkeeping company or a retail store. You can also save money otherwise spent on third party service providers. You get to work paper and clutter free; all this increases your efficiency as well as that of your employees and business.
- 24/7 Access– No matter where you are, or what time of the day, you, your clients and employees can access data when necessary without having to depend on anyone to send it over. Saves time and energy and everyone is happy.
- More Flexibility– When you are running a small business, you have so much to do; in fact, you may even be managing the whole thing yourself. Whatever your method of working, you need flexibility- the flexibility to work from home if needed for yourself and your employees, the flexibility to work out of office when travelling or at meetings. Cloud computing can give you that- greater flexibility for you and your team.
- Don’t Fear Losing Data– With cloud computing, you need not worry that you will lose data if your PC, laptop or phone is lost, damaged or stolen. Your data will be safe and secure on the cloud. You can also rest assured that viruses on your electronic devices will not corrupt your data.
- Access to Service Providers– Thanks to cloud computing, you can also outsource non- core business tasks like online bookkeeping, payroll and HR, and keep track of everything with ease on the cloud.
Cloud technology is here to stay and it has a whole lot of benefits. It can make your life a lot easier and manageable, so make the best of it.
We love credit cards, don’t you? They make buying stuff so much easier. Just whip out your credit card and shop, shop, shop! But when it’s time to clear the payments, we hate credit cards; simply because you ended up buying more than you needed. Now that’s on the personal front; what about business credit cards? If you run a small business, do you or do you not need a business credit card? Let us find out.
- Do You Make Frequent Business Purchases?– If you find yourself making business purchases on your personal credit card regularly, it is time you get a business credit card. Bookkeeping and accounting is also easier with business credit cards as these cards can be linked to your small business bookkeeping account and purchases updated immediately.
- Do You Want To Build Credit For Your Business?– Some credit cards will report your account to business credit bureaus, so if you want to build credit for your business, this is an option. Thoroughly research banks and their credit card options for small business bookkeeping, choose the right card and build credit for your business. Personal credit cards cannot build credit for businesses.
- Do You Want To Calculate Interest On Business Purchases For Tax Deductions?– Interest charged on business purchases is tax deductible. Calculating interest on business purchases for tax purposes when using a personal credit card is not easy. So if you would like to make the best of the tax options available to your small business, it would be a good idea to get a business credit card.
Credit cards are a boon and a bane, but they go a long way in making life easier for business owners and for small business bookkeeping purposes. If you feel it is about time you got a business credit card, well go right ahead and get one; but be careful how you use it especially if you have a history of overspending.
Confused? Well, CRM is simply Customer Relationship Management; so why is Customer Relationship Management important for receivable management? Because whether you get paid or not is greatly influenced by the relationship you share with your clients.
- Retaining Clients– Here is a simple fact- it is more expensive to acquire new clients than it is to retain old clients; which is why it is important that your receivable management efforts don’t adversely affect client relations. There may be many reasons for a non- payment- your client could have simply forgotten, or might be going through a rough patch and there are those who just don’t pay. Now the last type of client you don’t need to keep around, but the rest, well, they deserve a chance and have to be handled with care. So whether you take care of AR yourself or use receivable management services, remember that CRM is crucial.
- Improve Chances of Being Paid– If you treat your client with respect, they will want to continue doing business with you and will make sure that payments reach you on time. This will help to ensure that nothing falls through the cracks and that you get paid on time.
- Keeping Up-to-date and Accurate Information on Customers– Maintain cordial relations with clients and ensure that you have accurate and up-to-date information on your clients. If you use receivable management services, make sure they have correct details. Make it a point to know your point of contact by name and have good relations with them so that payment due calls are easier and not ignored.
Receivable Management services are never easy; it is strenuous and as a business owner you have a lot riding on it. But if you remember that customer relationship management is the key to getting the whole thing sorted, it will do you a lot of good. Besides no one ever said that running a business would be easy, but it is not impossible.
All employers have access to confidential employee data- social security numbers, bank account details, addresses, details of wages etc; all of which comprise payroll data. Payroll data is sensitive and it is the responsibility of the employers to keep it safe and confidential. Unfortunately, data security is a major problem in today’s world and data breaches are a common affair. No company is safe from data breaches; all you can do is ensure you take steps to keep your business records and data safe from attacks. So what can you do to ensure the safety of your data?
- Divide Payroll Responsibilities– The best measure against employee fraud is to involve more than one individual for sensitive responsibilities, in this case payroll. If you can afford to, you can assign tasks like reviewing time sheets, preparing payroll data, how to calculate payroll taxes and generating payments to different individuals. This can greatly reduce the incidence of pay check theft and fraud.
- Spread Awareness of Phishing among Employees– There has been an increase in the number of companies falling victim to phishing schemes. These emails generally claim to be from company executives and request for personal information. Educate employees of the dangers of such schemes and also how they can identify phishing emails, such as checking the email address it is sent from (whether it is a company email address or not). When in doubt, it is always better to contact the concerned executive before sending out the details.
- Invest in Reliable Computer Security Systems– Secure your payroll system. Studies show that over half a billion personal records were stolen via data breaches in 2015 alone. So make sure you have a strong firewall and spam filters set up, keep your systems neat and up-to-date, while figuring out how to calculate payroll taxes. Back up your data regularly and change passwords frequently. Get professional help to ensure your security systems are in place.
- Keep Physical Data Safe– Ensure you have everything covered; make sure your paper files, CDs and USBs are also secured. Keep all such materials in secure locations with limited staff access.
Data breaches can happen at any time in any place. Be on your guard at all times and take all necessary steps to keep your data safe in the event of an attack.
Launching a business is no small feat. From planning to executing and opening your dream business, it is a mad race but you are driven by passion. Unfortunately, or fortunately, it doesn’t end there; growing and sustaining a successful business is even tougher and at this stage, passion is not enough. However, if you remember a few simple things you will be able to build and sustain a thriving business.
- Choose the Right People– Surrounding yourself with the right people is important. You cannot run your company alone; you need people you can trust to share tasks with. You also need people who will give you honest feedback, people who can inspire positivity and possibility. Be careful what kind of people you choose; the wrong kind can ruin your business and you.
- Be Prepared– Being prepared is a crucial part of business planning and execution. You need to have a clear idea of what you plan to do, how to proceed, how to handle small business bookkeeping, payroll and other non- core business functions and a thorough understanding of the market. You also need to be mentally prepared to face anything that comes your way, to face challenges and obstacles head on.
- Make Time to Think– Being busy all the time is not good, because it indicates that you don’t have the time to think. Thinking and planning are essential ingredients in the formula for a successful business. So make good use of the 24 hours you have at your disposal; take help, outsource tasks like small business bookkeeping and IT and find time for your family, for yourself and your business.
- Honest Self Analysis– Do not ever make the mistake of falling for all the praise that you hear about your business. You need to constantly analyse yourself and review your business to understand where you stand. Set high standards and strive to achieve them. First time entrepreneurs are most susceptible to corruption from fame and adoration.
- Learning from Failure– Failure is never the end; as an entrepreneur, you will have to face many failures before getting it right. Failure is correctly called the stepping stone to success. Don’t lose heart when you face failure, instead take heart. Learn from your mistakes and prepare yourself for greatness.
Building a successful business is not easy, whether it is a small business bookkeeping business, a website or business development company, but it is not impossible either. Believe in yourself and your idea, work towards your goals and you will never regret it.
According to the networking site AngelList, in Silicon Valley alone, there are more than 23,000 start-ups; that is truly an impressive number. There is, of course, speculation and studies that indicate that the US market is facing a start-up slump for numerous reasons. Slump or not, every year sees a large number of start-ups emerging and these businesses pick up at an alarming rate. Sales pick up, more employees, tax demands increase- all in all, life isn’t as easy as it was when the start-up was founded.
As the founder of a flourishing start-up, one day you realise that you have a cash flow crisis. You have numerous overdue accounts receivable payments and with how things are going at work, you don’t have the time to contact defaulting customers and pursue pending payments. What do you do? Here are your options.
- Build an In-house Receivable Management Team– An in- house receivable management services team has its benefits. The team will be specifically trained to handle your business’ issues and needs. Such a team will also have the benefit of building and maintaining a good rapport with regular clients and customers. However, aside from having to take on the burden of hiring the whole team, you will also have to train them and keep an eye on them to ensure they are on the right track. Another issue is that as your business grows you might have to increase the size of your receivable management services team. If that seems like too much of work, there is a second option.
- Outsource to Receivable Management Services Companies– While there is a lot of controversy surrounding the topic of outsourcing, it is, without doubt, the best option for companies that don’t have the time or resources to build specific non- core business teams. Once you sign the contract, managing accounts receivables is no longer your headache; the receivable management services company will take care of it all. Their expertise in the field will allow them to negotiate with difficult customers and collect timely payments effectively. You will also have access to a larger team should the need arise.
Accounts receivable management is a thorn in the side for most start-ups. The bigger your company becomes, the more of a problem it is. If not dealt with quickly, receivable management can take down your company, so take action now.