Paying the vendors for the supplies they get you and receiving payments for selling your products might seem simple, but in reality is a very tricky business and needs lots of time and brains. In addition to dealing with customers, cash flow and account management is what keeps a business running and humming. Thus, you need to understand at least the basic money management, even if you have an account to check these things out, to know how they work and if you business is actually making the profits you wanted.
Apart from opening a business bank account for all transactions and bookkeeping, you will also have to familiarize yourself with money management principles and activities such as understanding credit, reading bank statements and tax forms, and making sense of accounts receivable and payable.
Along with this, you will have to consider the payment options you will offer customers such as cash, checks, debit cards, credit cards and online payment options, as well as establishing payment terms and debt collection in case of non-payment.
Here is an overview of the basic but very important money management guide that will give an idea of how money should be handled in a running business.
Opening a Bank Account
Once you have chosen a business name and gotten it registered, its time to open a bank account. It is an easy process and you just need to select a prestigious bank to work with. Take along your personal identification as well as your business name registration papers and business license as they will be required to open a commercial bank account.
You will have to deposit some funds into the new account so as to start the proceedings. Once the account is opened, all you need is to make transactions and enjoy the facilities.
Bookkeeping
You can either set up the financial books yourself or hire an accountant to do it as this is a time consuming job and you might not be able to do it with day to day operation of the business. You can also hire an accountant to prepare year-end financial statements and tax forms and keep all the records yourself too for security purpose.
Quickbooks or Quicken are great accounting software applications that help you keep the books yourself and are easy to use and almost enjoyable. Most accounting software programs help you in creating invoices, tracking bank account balances and merchant account information and tracking payable and receivable accounts.
Accepting Cash, Checks and Debit Cards
In order to stay in competition with all other businesses, you will have to offer numerous means of payment to customers that make it easy for them to do business with you including cash, debit card, credit card and electronic cash.
From account fees, transaction fees, equipment rental and merchant fees, you will have to pay them all depending on percentage of your total sales value. However, you can reduce these charges by shopping for the best service with the best prices. Various banks, merchant accounts and payment processing services have different charges as they too are in competition.
Cash is the best way to get paid as its liquid and requires no processing or time. As fast as it comes, you can use it for further investment and payment of bills to increase revenues and profits.
Cheque is also a popular way for payments in service business. However, you will have to be careful in receiving check especially when dealing with new clients to ensure that the cheque doesn’t bounce. Ask for a photo ID or customer’s driving licences number or ask for a bank draft to make it more secure. Checking dates and amount of money is also essential when dealing with cheques to make sure they are right and you do not suffer loses.
Debit cards are another option to get paid but you will need to rent or buy a debit card terminal. Mostly banks and credit unions unions offer business clients debit card equipment and services a low cost and you will be connect that terminal to a telephone line to make it work. The bank will also charge a transaction fee every time you use a debit card.
Credit Card Merchant Account
A large number of people now prefer to use plastic money for buying products and services. Almost every business now gives it customers the facility to pay with a credit card and often it’s a successful move especially for the web where customers buy and pay online only. To offer your customers the facility of online payment or credit card, you will need a credit card merchant account.
With a good credit history, you will be able your account easily and starting receiving credit card payments within no time.
Online Payment Services
Along with all means of payment online payment service is another great facility as it offers businesses and people to exchange currency electronically over the internet. These accounts allows funds to be transferred electronically among members
The best thing about online payment services are that they are quick, easy and cheap to open, regardless of credit rating or anticipated sales volumes and enable you to receive payment from any customer with an e-mail account. The funds are in your bank to do as you please.
Basic money management is very important for everyone who is considering starting a business even if it’s an online or home based one. Knowing about paying others and receiving payments is crucial to success of a business and having an in-depth knowledge about all means of getting paid will help entrepreneurs in increasing their sales and becoming popular among their customers.
