| 1. Reconcile the bank statement. | | | | credit terms, do what ever it takes to pay those bills |
| Reconciling the bank statement is one of the more | | | | on time. Credit terms are not given out easily, but |
| important things for a small business. Always know | | | | they are integral to success; make them a priority for |
| how much money you have. With the technology | | | | your business. |
| today you can go to your bank's website and check | | | | Collecting payment |
| your balance anytime you want. Business owners | | | | Perhaps the biggest obstacle a new business owner |
| need to consider the balance shown by your bank | | | | faces is getting your customers to pay on time. |
| only includes items that have cleared. It does not | | | | Because most small business owners are multi tasking, |
| take into account deposits in transit or any outstanding | | | | paperwork gets pushed to the back burner. Invoices |
| checks. Most, if not all, accounting software has a | | | | need to be sent out immediately, that is critical. Also |
| bank reconciliation feature. Use it, use it every month! | | | | make sure all the relevant information is on the invoice; |
| After you balance, review the outstanding items. Any | | | | your payment terms, invoice date, an invoice number |
| deposits over 10 days should be investigated because | | | | and, make sure to get a purchase order number. I |
| you have less money than you think you do. Checks | | | | can't tell you how many times companies I've worked |
| outstanding for over two months should also be | | | | with shipped out product only to be told "Oh sorry I |
| investigated. Most businesses deposit checks as | | | | guess that wasn't an order yet". Requiring |
| soon as they get them so a check outstanding over a | | | | customers to give you a PO number requires a |
| month or two could indicate a problem. | | | | deliberate act on their part, to contact their decision |
| 2. Connect and build a relationship with the accounting | | | | makers and, insures they have the proper approval. I |
| department. | | | | know, you want to make it as easy as possible for |
| 90% of business is based upon relationships. | | | | them to buy, but if it winds up coming back anyway |
| Usually small business owners only deal with their | | | | you're defeating the purpose. Also, when have a |
| assigned salesman, rep, purchasing department, project | | | | PO number be sure it's on the invoice, especially if |
| manager, or foreman. These are not the people | | | | you're working with a new company. I can guarantee |
| collecting the money or paying the bills. It is extremely | | | | if their accounts payable gets an invoice, from a |
| important to build a relationship with the accounting | | | | company they don't recognize with no PO number, it's |
| department for 2 main reasons; Getting set up on | | | | going straight in the trash. They just got themselves |
| payment terms and collection timely payments. | | | | 20 extra days, until you call looking for payment. |
| Getting set up on terms | | | | Which brings up my last point, call and follow up, if your |
| It is extremely important for cash flow purposes to | | | | terms are 30 days call at 20 to be sure it's on |
| be set up on terms. However, due to lack of | | | | schedule. The Collection process is not fun, but it will |
| payment history, this can be very difficult. You will | | | | bring cash in faster. |
| need to constantly make an effort to get set up on | | | | Cash management is probably the number one most |
| terms. Every order that is place, ask. Ask about | | | | important area for small businesses, and it does take |
| the requirements and be sure to complete any | | | | time. If you can't spend the time required consider |
| paperwork that is needed. Call and talk directly to the | | | | hiring someone to do it. Bookkeeping services are |
| credit manager. If they have heard your voice and | | | | very cost effective, and if they can speed the invoicing |
| know your name and if you know theirs, you're | | | | and collections process. That by itself would be well |
| probably going to get treated a little different. And | | | | worth it. |
| when you do get the chance, and they extend you | | | | |