Whether they're charging hotel rooms while on the road or sending electronic payments to service providers, professionals need access to a secure, convenient way to pay. The earlier your business can set its systems up, the easier it will be to track your financial health from one year to the next. Here are six steps you should take to set up payment management for your business.
In order to pay the many expenses your business will have, you'll likely need a variety of accounts. This starts with a business checking account, which you'll use to pay bills such as your office space rent and utilities. However, as you grow your business, you'll probably need to pay service providers such as graphic designers and virtual assistants. A service like PayPal, ChasePay or CSI globalVCard can help you easily transfer money from your account to various providers without having to print a check or give out your credit account numbers.
Invest in Bookkeeping
Once you have your accounts in place, you'll need a way to track every dollar you spend. For new businesses, a full-time bookkeeper usually isn't an option, but with so many cloud-based solutions, you likely won't need one. Ideally, your bookkeeping solution will be able to help you send invoices and receive payments, all while logging each activity to allow you to monitor your income and expenditures in real time.
Create a Budget
A budget is a great way to be proactive about your business's funds. Obviously your early budgets will fail to include all of the expenses you'll encounter on a monthly basis but over time, you'll be able to adjust the numbers to be more accurate. Your budget should include fixed and variable costs and profits, which will give you an overview of your cash flow. Over time, you'll be able to consult your budget whenever you need to reduce your expenditures to improve your revenue.
Issue Purchase Cards
All business purchases should be confined to one account, which means you should avoid using personal funds for anything related to your venture. Choose a corporate card that has a variety of options, including features like travel administration and fraud reduction. Once you have begun hiring employees, keep a close watch on employee expenditures to ensure you catch any fraud as soon as possible.
Tracking every dime you spend on your business can be challenging, especially while you're on the road. Choose an expense-tracking app that makes it easy to capture those expenses, preferably one that lets you store photos of your receipts. Many receipt-capturing apps use optical character recognition to convert the figures on the receipt to text to make bookkeeping easier.
Once your bookkeeping and payment processes are underway, set up processes to regularly audit your books to identify any issues. This will allow you to maintain consistent awareness of your business's finances, which will come in handy if you have to answer to investors or clients. You can conduct these audits yourself, but you may find that an independent auditor can more objectively review your accounts and identify any issues you should address. Once you have employees, make sure your procedures include having two parties involved in accounting activities to reduce fraud.
Financial transactions are an important part of doing business. When you put the right systems in place and regularly review your books, you'll be able to better manage your funds. Over time, you'll grow more experienced with managing your business's payments and you'll be able to better predict your expenses and identify and resolve any serious issues quickly.