Setting up Your Financial System
Posted on April 3rd, 2008
When you open your business you should set up a separate business checking account. We recommend selecting a small or local neighborhood bank where your business will be noticed and valued. If you’re happy with your existing bank, you may want to open your business account there because they already know you. Find out what the bank’s policy is on holding checks deposited for, collection, however. Some banks won’t credit your account for checks over a certain amount until the checks have cleared. This could cause cash-flow problems for you, so accept only immediate access to your funds.
Cash flow is the lifeblood of being self-employed. Making sure you collect what you are owed is like making sure you get your paycheck. The best strategy for having ample cash on hand, of course, is to make sure you have plenty of business. But you also have to make sure you get the money you’re owed in a timely fashion. To keep your cash flowing, get money up front, take deposits, get retainers, and require partial or progress payments. Request payment in cash at the time of sale or delivery of your service. Take bank cards instead of extending credit. Experts claim that offering MasterCard or Visa can increase your business 10 to 50 percent. Unfortunately, most banks will not offer MasterCard or Visa merchant accounts to home-based businesses.
If you must bill your clients or customers, always bill promptly instead of waiting until the end of the month. Also offer discounts of 2 to 5 percent if payment is made within ten days from the date of the invoice. And be sure to act promptly on any overdue account. One of the best ways to make the most of your money is to keep careful track of it, so set up a reliable bookkeeping and accounting system right from the beginning. The purpose of keeping good records is to enable you to know how your business is doing. With good records, you’ll know where you’re making a profit and where you aren’t. You’ll know what your costs have been, where you can cut expenses, and in which ways you’ll need to modify your plans and projections. Good records also will enable you to take the greatest advantage of allowable tax deductions and will protect you should you be audited.
Today the easiest way to keep simple, accurate records is to use a computer with software like Quicken and or simple Microsoft Excel. Such programs keep your records balance and you can quickly print out income and expense reports. You may also go ahead and take a look at this long list of banks in the Philippines
