Whether you are a new or an experienced business owner, taking control of your finances is a very important task. It doesn’t even matter whether your business is small or large, but organizing your finances is a crucial thing if you want it to succeed. If you run a large business, chances are you have a full time accountant taking care of that, so it will be more useful to a small business owner, who will probably be doing it himself. However, even if you have an accountant, it doesn’t hurt to learn more about business finance management. This article will cover some easy steps you need to follow if you wish to organize your finances. It is ideally useful to those who want to start a new business as it will help in determining the best thing for your business.
Keep The Bills In One Place
When the bills arrive, ensure you keep them in one place. Misplaced bills are one of the major causes of late fees, and this can damage your credit rating. Whether it is a file, a drawer or a box, be consistent. However, size is important and of you get a lot of mail, then keep them in a place that will not fill up too quickly.
Pay The Bills On Schedule
Paying bills can be simplified if done at scheduled times during the month. You can establish a date where none of the bills will be late, but this will depend on how many bills you receive. If you pay the bills as you receive them, then chances are you will be spending too much time on the chequebook. Yes, bills may state that they are payable upon receipt but most of them have a grace period. In this case, call the creditor and find out when they need the payment before it is regarded late.
Read The Credit Card Statements
Most individuals take advantage of low interest card offers, but they never take the time to read the statements when paying the bills. Credit cards are known to use low interests as baits for new customers and then switch them to higher rates after a few months. So, make a habit of going through your statement carefully and see what interest rate you will be subject to every month and whether there are any transaction fees have been applied. If a transaction fee appears or the interest rate increases, a simple call to the credit company is often beneficial is resolving the issue. If it’s not resolved, then switch your money to a more favourable rate.
Consider Automatic Payments
Most banks provide a way to deduct money automatically from your accounts to pay the creditors. Ideally, the creditors offer a lower interest as this payment option enables them to get their money quicker and on time. However, make sure you take note of the deduction date to not run the risk of bouncing other checks.
Get Overdraft Protection
Most banks will have a service where if you run the risk of bouncing a cheque, the money will come from another source. The bank will link your account to either a savings account, a credit card or a money market for a nominal fee. This will avoid the embarrassment of a bouncing cheque.
Cancel The Unused Accounts
Whether it is a bank account or a credit card, write a letter to request its closure. This will not only improve your credit score, but it is a convenient way of avoiding scattering money everywhere. Do not let the credit companies and department stores lure you to open new accounts by offering favourable interest rates. It is very easy for credit to get out of hand just by taking advantage of every credit offer you come across.
Establish Automatic Savings
You should create a link from current account to savings account. This can be done through the bank, and automatic amounts will be transferred every month. Most people don’t put money in a savings account on a regular basis, and they may wait for a huge tax refund or another event to actually deposit money into savings accounts. If you make a habit of saving every month, your account will start to accumulate money faster than you think.
Consolidate Your Accounts
If you happen to have several credit card accounts that have outstanding balances, you should try and consolidate them into one. However, be careful and check for the one time fees and balance transfer interest rates. Having all your money in fewer places eliminates guesswork and minimizes errors.
Computerize Your Chequebook
A software program can be of much help in helping you organize your finances. There are many easy to use programs that make bank reconciliation and bill paying a cinch. Computer checks can be ordered anywhere and they fit right into most of the printers today. Once they are printed, all of the info is automatically recorded in the electronic chequebook. Moreover, most banks have direct downloads to these packages so, when money is withdrawn or deposited, the transaction is directly entered into your computer. Imagine this with the taxes, it couldn’t be easier.
Clean Up Your Files
Ensure that all paid bills are arranged in a filing cabinet. You should also make a habit of going through the files at the end of each years and throw away any bills and receipts that are not needed for auditing purposes. You can contact your local tax office and see how long records should be kept for audit purposes. Often, tax return audits may be done 6 years back, but cancelled cheques should be kept for seven or so. You can ideally check on the internet for record keeping and auditing procedures.
If you follow all these steps, then you will have succeeded at organizing your business finances which will contribute to a smooth running altogether.