Money Management Tips: Do not save what is left after spending; instead, spend what is left after saving.
Besides receiving income from various sources and money management, it can be a tricky business. Because, in addition to customers, cash flow and managing accounts properly are what keeps business humming along.
You need to familiarize yourself with basic bookkeeping and money management principles. And activities such as understanding credit, reading bank statements and tax forms are to be familiar with. Also, making sense of accounts receivable and payable.
Also, have to give careful consideration 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.
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Money Management Tips:
Having a savings bank account:
- Earn Interest on Savings.
- It solves your Purpose.
- Can access it easily.
- It keeps your Money Safe.
Irrespective of corporate domain or business domain, once a registered business, will need to open a commercial bank account. Setting up a business bank account is easy.
But, why is it essential to have a savings account?
Start by selecting the bank you want to work with–think small-business-friendly–and call to arrange an appointment to open an account. There’s not much more required than that.
If your credit is sound, also ask the bank to attach a line of credit to your account, which can prove very useful when making purchases for the business or during slow sales periods to cover overhead until business increases.
Also be sure to ask about a credit card merchant account, debit account, and other small business services.
- Ensure that all of a company’s expenses, income, and transactions are recorded in the company’s books
This advice comes in for all those whose business varies from large scale to small scale. When it comes time to set up your financial books, you have two options–do it yourself or hire an accountant or bookkeeper. You might want to do both by keeping your own books and hiring an accountant to prepare year-end financial statements and tax forms.
If you opt to keep your own books, make sure you invest in accounting software such as Quickbooks or Quicken because they’re easy to use and makes bookkeeping almost enjoyable. Most accounting software programs allow you to create invoices, track bank account balances and merchant account information, and keep track of accounts payable and receivable.
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If you’re unsure about your bookkeeping abilities even with the aid of accounting software, you may wish to hire a bookkeeper to do your books on a monthly basis and a chartered accountant to audit the books quarterly and prepare year-end business statements and tax returns.
Accepting Cash, Checks and Debit Cards
- Debit cards allow bank customers to spend money easily by drawing on funds.
- Credit cards allow the holder to purchase goods or services on credit.
- Cash, on the other hand, is money in coins or notes, as distinct from cheques, money orders, or credit.
In today’s fast-paced digital environment, you must provide customers with many ways to pay, including cash, debit card, credit card and electronic cash for the free flow of income. 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 in the 21st century. 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.
Important means of transaction
- 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.
Say, if you’re running a service business, one the most popular way people still pay for services is with a check. You have to take a few precautions to ensure you don’t get left holding a rubber check, especially when dealing with new clients.
Debit cards are another option, but to accept them, you will need to buy or rent a debit card terminal. Most banks and credit unions offer business clients debit card equipment and services.
Online Payment Services
- These services allow people and businesses to exchange currency electronically over the internet.
For example, PayPal is one of the more popular online payment services. With more than 40 million members in 45 countries, offering personal and business account services.
Both types of accounts allow funds to be transferred electronically among members, but only the business account enables merchants to accept credit card payments for goods and services.
The advantages of online payment services are that they’re quick, easy and cheap to open, regardless of your credit rating or anticipated sales volumes.
- You can receive payment from any customer with an e-mail account.
- You can have the funds deposited directly into your account, have a check issued and mailed, or leave funds in your account to draw on using your debit card.
The only real disadvantage is that most services redirect your customers to their website to complete the transaction.
- Progress payments are also a way to ensure that you do not leave yourself open to financial risk.
The key to successfully securing progress payments is to prearrange your contract and payment terms. Agree on the amount that will be due at various stages of the project.
Better arrange for more concrete progress payments based on indicators. Indicators are relevant to the specific scope of work, the job or the services provided.
Regardless of the system, progress payments on larger jobs can dramatically lessen exposure to financial risk.