Money Management Basics

Getting paid some time is a real pain in the butt. And cash flow is critical and the life line to a small business success.

money management can be challenging because, in addition to customers, cash flow and managing your customers’ accounts properly is what keeps your business moving along.

As a result, getting paid in full and on time, as well as understanding money management, has to become a priority, even if you elect to hire an outside accountant or bookkeeper to manage your books.

You will still need to educate yourself with basic bookkeeping and money management principles and activities such as understanding credit, bank statements and taxes, and understanding accounts receivable and payable.

You also have to mindful to the purchase payment options you offer customers, including cash, checks, debit cards, credit cards and online payment options, as well as establishing payment terms and debt collection in the event of nonpayment.

Accepting Cash, Checks and Debit Cards

In today’s super-competitive business environment, you must provide customers with many ways to pay, including cash, debit card, credit card and electronic cash.

There is a cost to provide these payment options–account fees, transaction fees, equipment rental and merchant fees based on a percentage of the total sales value.

But these expenses must be viewed as a cost of doing business. You can, however, reduce fees by shopping for the best service with the best prices.

Not all banks, merchant accounts and payment processing services are the same, and fees vary widely. You can also check with small business associations such as the chamber of commerce to see if they offer member discounts; it’s not uncommon to save as much as 2 percent on credit card merchant fees.

Just remember, consumers expect choices when it comes time to pay for their purchases, and if you elect not to provide these choices, expect fewer sales.

Cash is the first way to get paid, which is great because it’s liquid and there’s no processing time required. As fast as the cash comes in, you can use it to pay bills and invest in business-building activities to increase revenues and profits.

The major downside is that cash is risky because you could get robbed or lose it. In cases like that, collecting from your insurance company could prove difficult if there’s no paper transaction as proof.

Even if you prefer not to receive cash, there are people who will pay in cash, so get in the habit of making daily bank deposits during daylight hours. Also invest in a good-quality safe for cash storage for times when you cannot get to the bank.

 

 

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