Posts Tagged ‘Accounting’


What Should I Give Away When A Customer’s Unhappy?

One of the most common and emotionally fraught questions I encounter is this: "How should I compensate a customer for a service or product failure?

No matter how superb your product or service is, everyone in business eventually needs to find the answer to this question.  And the answer to the question is this: It depends. Customers have diverse values and preferences, varying even from day to day as well as from customer to customer—so your employees working with disgruntled customers need to be given enormous discretion.

Still: There are principles that almost always apply:

  1. Most customers understand that things can and will go wrong. What they don't  understand, accept, or find interesting are excuses. For example, they don’t care about your org chart: Your mentioning that a problem originated in a different department is of no interest to them.
  2. Don’t panic. With most customers and in most situations, customers’ sense of trust and camaraderie increases after a problem is successfully resolved, compared to if you had never had the problem in the first place. This make sense, since you now have a shared experience: You have solved something by working closely together.
  3. Avoid assuming you know what solution a customer wants or ‘‘should’’ want. Ask. And if a customer makes a request that sounds extreme or absurd, don’t rush to dismiss it. Even if it seems on its face impossible, there may be a creative way to make the requested solution, or something a lot like it, happen.
  4. Dont strive for ‘‘fairness’’ or ‘‘justice.’’  Creating, or preserving, a customer’s warm feelings for a company isn't about fairness or justice. It's about being treated especially well.
  5. Learn from customer issues, but dont use them as an opportunity to discipline or train your staff in front of your customer. This may sound obvious, but it happens quite often. Watch out for this flaw, especially when you’re under stress.
  6. Dont imagine youre doing something special for a customer by making things how they should have been in the first place. Time cannot be given back—it’s gone. The chance to get it right the first time? It’s gone. So re-creating how things should have been is just a first step. You need to then give the customer something extra. If you aren’t sure which ‘‘extra’’ to offer a particular customer, just make it clear you want to offer something. If the customer doesn’t like red lollipops or doesn’t eat sugar, she’ll let you know. Then you can decide together on a different treat.
  7. …And always, always, keep an eye on the lifetime value–directly and as a vocal supporter–of having a loyal, engaged customer. A loyal customer is likely worth a small fortune to your company when considered over a decade or two of regular purchases, not to mention that customer's "network value"–the value of her or his recommendations online and off.

Perhaps in your business this number is a few thousand dollars, or perhaps it's hundreds of thousands. It's well worth figuring out that number and keeping it in mind if you ever feel that temptation to quarrel with a customer over, say, an overnight shipping bill.

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How to Get Paid 7 Days Sooner in Your Small Business

One of the biggest pet peeves of small business owners is late-paying clients. We’re not running corporations, so cash flow can make or break our businesses! And when a client doesn’t pay on time, we can’t pay our own vendors. It’s a sticky situation, but with a little strategy to light a fire under your clients, you can get paid not only on time but even seven (or more) days early.

Look at Why They’re Paying Late

If you have a client who typically pays on time, one late payment may be nothing to worry about. But analyze your accounts receivables to see if you have other clients who habitually pay their invoices after your due date.

Next, look at your payment policy. Is it clear on each invoice when the payment is due? Do you let your client know at the beginning of your business relationship when payments are due? If it’s not clear to a client when you expect a payment, you can’t blame them for the problem.

If this is the case, send an email letting your clients know your payment policy. Consider sending this to all clients so those late-payers don’t feel you’re picking on them. Make it objective and simply a notification of your company policies. And make sure that due date is clear on each invoice.

You can also send a reminder a few days before the invoice is due. It’s completely understandable that your email invoice might have gotten lost in the stack of emails in your clients’ inbox.

Offer Incentive to Pay

There’s two ways to go about this: in the first, you can charge a penalty for late payments. Not everyone wants to take such a negative approach, but if you think that’s the right motivation to get your clients moving (after all, who wants to pay more if they can simply pay on time?), then try it out.

The other is to offer a discount for early payment. You’ll have to decide how much money you’re willing to part with in order to get paid on time. Many businesses offer something like a 2% discount if the invoice is paid 7 days early, or even 5% off if they pay 14 days early. Make the amount enough to motivate them to pay early.

Whichever incentive you decide to offer, mention it in the email you send about your payment policy. It’s imperative that you clearly communicate any changes to your clients, as well as give them a heads up of a few weeks or even a month before this new policy kicks in. The last thing you want to do is upset your customers.

If They’re Still Not Paying on Time…

Consider each on a case-by-case basis. Perhaps one client is having his own financial woes. In that case, set up a payment plan that works for both of you. If it’s not a financial problem that’s keeping a client from paying on time, consider whether you truly want to continue working with a problematic client like this.

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The 10 Most Common Accounting Mistakes That Cost Big Money

There is money flowing out of your business right now as a result of simple accounting mistakes. Here are the top ten and how to fix them:

  1. Not balancing your bank statements. All sorts of strange deductions can happen from your cash accounts at your bank. For example, checks and direct transfers can be cleared for the wrong amount. Checks can be cleared in your account that are not your checks. A transaction may be recorded for $63 when it is supposed to be $630 or worse, it could have been entered twice. Solution: Balance the checking accounts every month. Have it done by a different person than the one that pays the bills to add an increased level of security. Have an accountant check it quarterly.
  2. Letting customers pay with 30, 45 or 60 day terms. Every day, you don’t collect money from customers for an outstanding bill is a day you are acting as their personal bank. Solution: Ask to get paid at time of purchase or no later than 30 days. You will be amazed how many customers will agree to do this.
  3. Not following up to see if invoices are received and scheduled to be paid. Many small business owners’ mail or email invoices, but never check to see if they were received by the customer or when they are scheduled to be paid. Solution: Establish a strict follow up schedule. Call to see if the invoice was received and when it is to be paid. If payment is not received by the promised date, follow up again.
  4. Not checking invoices and vendor statements against products that are received. Did the vendor bill your company only for products ordered? Did you actually get the products that you wanted and were billed for? Solution: Match every bill against a purchase invoice. No exceptions.
  5. Not balancing checks against invoices. Are all the invoices for real products the company legitimately ordered? Creating phony invoices for imaginary vendors is the biggest way employees steal from companies. Solution: Carefully control the ability to create new vendors in the accounting software.
  6. Keeping track of cost of goods sold. What was actually paid for the product? What was the gross profit on it? Too many times, the small business owner is unaware of both of these answers. Solution: Practice a careful accounting method of LIFO or FIFO for managing inventory.
  7. Not the right amount of inventory. If there is too much inventory, the small business burns their cash flow. If there is not enough inventory, the customer fill rate is too low and the company can lose customers. Solution: Carefully track inventory turns, fill rates, reorder points and reorder quantities.
  8. Over paying on bank fees. Since the Great Recession, there has been an explosion of bank fees. Small business accounts have monthly maintenance, merchant accounts, wire transfer and minimum balance fees. Solution: Negotiate with your bank  for lower fees or find a community bank that may be more flexible.
  9. Capitalizing research and development instead of expensing it this year. Many companies depreciate capital expenses over a long period of time which increases their profit. Solution: New permanent tax laws enable small businesses to write off up to $500K in a single year.
  10. Not keeping track of all your business expenses. Small businesses owners get lazy and don’t keep track of all their expenses to write off. Solution: Implement a system like Shoeboxed to take photos of expense receipts when they happened for easier filing.

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What Is the Ice Bucket Challenge for Small Business Owners?

Doing_the_ALS_Ice_Bucket_Challenge_(14927191426)Have you taken the “Ice Bucket Challenge”? It challenges friends to put a bucket of ice over their head or donate $100 to the ALS Association. The rules state that within 24 hours of being challenged, participants need to video record themselves by accepting the challenge followed by pouring a bucket of ice over their head. The participant then challenges others on that video. As a result of this viral phenomenon, the ALS Association has received $31.5 million in donations during the past month. 

What would the small business version of the Ice Bucket Challenge? Consider these for yourself:

“The Cash Flow” Challenge: You only have $1000 in the bank on Monday to keep running your business until Friday. Help to beat this challenge: Learn how to read a cash flow statement every month so there are no surprises.  If cash is low, isolate the expenses that need to absolutely be paid or it will drive you out of business. Be direct to vendors and employees about when they can expect to be paid.

“The Customer Satisfaction” Challenge: Your top customer is dissatisfied and is threatening to leave your business. Help to beat this challenge: Listen fully to what the customer has to say. Ask them what the best solution to the problem is. Follow through to a resolution and report back to them on the results.

“The Key Employee Left” Challenge: A key employee just quit and now you have to replace them in 24 hours. Where do you look to replace them? Help to beat this challenge: Always ensure that your employees are cross trained so if one leaves, another can do that job for at least a short time.

“The New Version of Your Product Doesn’t Work” Challenge: You announced a new product, but the latest test show it does not work. You have thousands on backorder. Help to beat this challenge: Isolate what is wrong with the product and what can it be fixed in a reasonable amount of time. Take any other functionality out and notify backorder customers when a product can be shipped.

“The 16 Hours of Work Needs to Get Done in 24 Hours” Challenge: You have a huge pile of work to get done today that will take a lot longer than you have. Help to beat this challenge: First decide what not to do. How will it really affect the business if the work was done tomorrow instead of today? What two things must get done today that are critical to the company?

What would your small business challenge be?


How You Can Grow Your Small Business to 7 Figures

Stocksy_txp1c8dcf91CD8000_Small_201077So many entrepreneurs I meet think too small. They’re concerned about paying today’s bills, and give little thought to where they’d like to take their business down the road. That’s an obstacle to success, but one that can be overcome with a little planning and strategy. But the most important thing to making more money is to believe that you can. So let’s get started! It’s time to stop struggling and start thriving in your business.

First, Visualize What You Want to Achieve?

Don’t be afraid to unleash your imagination here. Think big! Would you like to run a $5 million company? Sell it in five years and then retire and travel the world? You can’t hope to grow to any level of success if you don’t first establish what your goals are.

Write these goals down and develop a vision board. No matter how pie-in-the-sky they seem at first, if you think it, it can happen. It’s not your job to judge your desires, just to record them. Seeing these goals on paper or a poster will help you get the right mindset to start believing in those goals.

Next, Figure Out How to Get There

You wouldn’t leave for a major road trip without a map. It’s the same as a business owner. You need a plan for how you’ll get to the destination (those goals you set). It may be overwhelming right now to consider becoming a $5 million company, but if you break that goal down into smaller ones, you’ll actually be able to achieve them.

Maybe the first step is to hire a salesperson or expand the area you service. These are small and simple tasks. Continue your list of action items that will help you reach your goal, and assign timeframes to them. You could even list tasks to complete each quarter to lead you to your goal.

Find One Thing You Do Really Well

This might be a superior product. Or your insanely fast delivery time. Whatever that characteristic that makes you different (and better) than the competition, own it. And use it in your marketing material. You want people to know what makes your company unique from the second they discover you.

Hire the Right People

Few solopreneurs are able to reach that 7-figure goal without a little help. And there’s no shame in hiring people who are smarter than you! Find professionals who can complement your skill set with other qualities, and hire help to fill in the gaps with those tasks you simply don’t have the bandwidth to do yourself.

Another note on hiring: it’s important that you create a company culture that makes all your staff — whether they’re full-time or freelance — feel like part of something bigger than themselves. They’re going to be key in helping you hit those 7-figures, so make sure your company is inviting and that they want to work hard for you for years to come.

Refine Your Sales Process

The smoother your sales process is — and any other process in your company, for that matter — the more sales you can make. Automate what you can, from letting people easily make purchases online or sending an email after a purchase, and put personal attention where needed. This is where having sales staff can make a huge difference. You want every single customer to feel like he has the support and access he needs should he have questions or want help.

Lather, Rinse, Repeat

Success doesn’t happen when you keep doing the same thing over and over. It happens when you pay attention to what’s working and do more of it, and cull what’s not working. Be constantly diligent to ensure that you’re firing on all cylinders and moving closer to that 7-figure goal.


Desperate for Cash? Beware of These Lenders

One of the main results of the banking crisis that brought the Great Recession was a new law created to protect the consumer through the Consumer Financial Protection Bureau. Unfortunately, this has only moved the focus for predatory lenders to small businesses.

Desperately seeking cash, these owners are now at risk of borrowing money for their companies and not fully understanding the terms of their loans. The subprime lending industry has exploded to $3 billion. These loans are still unregulated and are not protected by the same laws that cover individual borrowers. Mark Pinsky of Opportunity Finance Network says “[For subprime business lenders] the sweet spot is someone who can limp along well enough for six months but probably isn't going to be around much longer…They’re in the business of helping these businesses fail.”

Stocksy_txpbb9bc609CY7000_Small_159204According to Bloomberg Businessweek, one of the companies specializing in subprime lending – also referred to alternative lending – is World Business Lenders. The firm’s representatives pitch their high-rate loans to small business owners who have trouble borrowing elsewhere. World Business Lenders seizes collateral such as vehicles and other assets when borrowers can’t pay, and press legal action where World Business sues companies for missed payments, often sending companies into bankruptcy. In fact, 20 percent of World Business’s borrowers were forced to close down last year, according to former executives.

This capital comes from well-known sources. One subprime business lender, OnDeck, has credit commitments from financial lenders like Goldman Sachs. Interest rates on loans from OnDeck range from 29 percent to 134 percent.

Sales representatives of these types of lenders can use confusing terminology such as “short-term capital” and discuss “money factors” instead of interest rates when talking to potential borrowers. Here are steps you need to take before signing any loan agreement:

  1. How much are you borrowing? Know the exact amount you will receive after any application, up front or prepaid fees.
  2. What is the actual annual interest rate?  Make sure you understand in writing the nominal and effective annual percentage rate.
  3. What is the borrowing term? How often do on time payments need to be made? What are the penalties for late payments?
  4. Are there other fees for paying off the loan early? Some agreements apply all the term interest even if the loan is paid ahead of schedule.
  5. Is there a personal guarantee? Are just the officers of the company signing the documents or do you need to personally guarantee it as well?  Stay away from these types of guarantees that can put your personal savings and home at risk.
  6. Don’t rush it. Don’t be in a hurry to sign any document. Think about it for a day. Show it to a professional advisor (or a banker) to get their opinion on this source of capital.

Always look at all other available sources of capital before agreeing to this type of loan. Check for help from friends, family, customers and additional business cash flow management.


How Spreadsheets Can Turn You into a Business Super Power

Posted on by Carol Roth

supermanphoneboothWhen Clark Kent runs to a phone booth and emerges as Superman, a competent, mild-mannered news man begins using an entirely different set of skills to save the world.  These days, phone booths are a rare sight, but you don’t need one to develop business super powers.  By embracing the capabilities of spreadsheets, you gain skills that help you wear the many hats (or capes) that you need to run a successful business.

You are already well versed in providing your goods or services to happy customers, but any business requires you to be equally adept at planning, organizing, analyzing, reporting and countless other activities.  So, update your superhero wardrobe and toolkit by replacing your many hats with a single spreadsheet cape that helps you super-charge your capacity to handle any type of business task (although I don’t recommend going with the superhero look of wearing your underwear over your pants). 

Here are a few great ways that you can use spreadsheets to “save the day” in your business.

Handling Administrative Tasks Faster than a Speeding Bullet

Like me, you probably view administrative activities as the evil villain in your business day.  How many of your filing cabinets contain nothing but time sheets, expense reports, travel advance requests and other forms that your employees use to keep track of administrative issues?  And how many employees spend countless hours checking the math and making sure that these forms are complete? 

Spreadsheets to the rescue!  When you switch from paper to spreadsheets for your business paperwork, you can release floor space for better uses than paper filing, while freeing employee time (or your time) for more valuable tasks.  Since my college days, Microsoft Excel has been my spreadsheet of choice (which may explain why the company is now one of my clients), so that’s what I recommend.  Microsoft Excel provides an amazing array of helpful templates when you create a new spreadsheet.  Heck, they provide over a dozen templates just for employee time sheets.  But on the off chance that you cannot find the template you need, you can probably find it online on Microsoft’s Templates page.  Browse these templates to get inspired on how you can streamline your administrative duties.

Planning and Reporting with X-Ray Focus

Spreadsheets make planning and reporting easier, more accurate and more collaborative.  By building in assumptions and using formulas for calculations, you can easily test different scenarios, such as what happens if you were able to generate a cost reduction for a key client or what happens if you doubled your revenue.  By copying the current year’s formulas, you can also project future years without having to recreate the wheel each time, which saves you time.  And your customers, lenders and accountants won’t need X-ray vision to find or understand the information that they need.

And, of course, templates are available to help you create everything from startup business plans to just about any type of financial report that you can imagine, so you don’t even need to create them from scratch. 

Use the Power of Charts and Graphs

Analyzing data can be valuable for companies to see trends and deficiencies.  Whether you have one client that is accounting for too much of your business and creating additional risk, or a continual increase in your expenditures of professional services, sometimes it is easier to see with the visual presentation of charts and graphs.  Using spreadsheets, you are just a few clicks away from converting that dry data into colorful charts and graphs that instantly make data evaluation a snap. 

Not only do charts and graphs make it easier for you to analyze data, they are great for transforming presentations as well.  

Whether you do it all in your small business or even if you have the luxury of delegating number crunching to an employee or two, your business needs consistent, accurate and professional-looking information to grow and prosper.  I hope that you will use these suggestions to replace drudgery with productivity.  Then, continue the adventure by finding many other ways to use spreadsheets to make the switch from mild-mannered business owner to business superhero.


6 Best Apps to Manage Your Business Finances

????????????????????????????????????????????????????????????These days, the idea of spending 40 hours a week in the office is foreign for most small business owners. We’re more likely to be traveling to business meetings and conferences, or out in the field with clients. And with the technology we have currently available, it’s easier than ever to manage our businesses, no matter where we are, especially by leveraging mobile apps.

Keeping on top of your finances is imperative for your small business. Take advantage of apps provide to manage your money from any mobile device. Here are my suggestions of the 6 best apps to manage your business finances.

1. Freshbooks

If you’re a Freshbooks user, you’ll appreciate the features of its mobile app. In addition to providing access to your accounts, you can also snap photos of paper receipts and log them as expenses, send invoices on the go, and use the time tracking tool to account for hours spent on a given project.

The details: The Freshbooks app is free for users, and is available for both Apple and Android devices.

2. Expensify

If you keep track of your business expenses and hate paper receipts, you’ll love Expensify. This mobile app helps you take photos of receipts, categorize the expenses, and send expense reports right from your phone or tablet.

The details: The app is free and available for iOS, Android, BlackBerry, and Windows phones.

3. Square

For retailers and restaurants, credit and debit card payments usually make up a large part of their revenue. In fact, by 2017, it is predicted that only 23% of transactions will be cash-based.

But sometimes those bulky merchant card processing machines are overkill, and many charge more than you want to pay. And what if you want to sell products at a farmer’s market or community fair? Try the right tool for the job: Square is a card reader you can affix to your phone to swipe cards for payments. It’s handy on the go and in your physical location.

The details: The app and card reader are free, and credit card processing fees are either 2.75% per swipe (based on the transaction cost) or 3.5% + $.15 per transaction, depending on the plan you choose.

4. inDinero

If you’re looking for a mobile app that offers multiple financial functions, try inDinero. Both its website and mobile version offer services related to accounting, taxes, payroll, 1099s, bill payment, and compliance. Users even get access to accountants for difficult questions.

The details: The tool is “invite only.” The company looks for businesses with high-growth potential.

5. SurePayroll

If you have employees, use mobile app SurePayroll to pay your staff and contractors, manage employee information, and view payroll reports. This frees you up from having to physically be at your desktop to take care of employee needs.

The details: The app is available for iPhone and Android, and is free for SurePayroll users.

6. FreeAgent

For freelancers and independent contractors, it’s essential to stay on top of proposals, invoices, and time tracking. The FreeAgent app provides all these features, as well as expense tracking and reports.

The details: The services is $24 a month and available for iPhone, Android, and Windows phones.

There are many other financial mobile apps in the marketplace, so find the ones that fulfill the needs your small business has.


4 Mistakes that Will Get the Government Calling You

?????????????????????????????????????????????????????I can still remember the day the Department of Revenue shut my company down.  It seems that we had not done a timely job of remitting the sales tax that we had collected from our customers and this government agency wanted their money. My bookkeeper had apparently ignored all their warnings by mail. When they arrived, they put a big sticker on our door, telling all our customers and employees that we had to "pay up to open up". It was a similar story when the IRS was concerned that we were not remitting employees' collected payroll taxes in a timely period of time. This situations happened because as a new owner, I did not know all my tax responsibilities.

Here are four mistakes that can get the government calling on you and maybe even putting you out of business:

  1. Non payment of payroll taxes. Each pay period, a company deducts from the employees paycheck taxes that are due to the government. If a company is doing this themselves, this money needs to go into a separate account and get sent to the appropriate agency.  A better way to do this is to use a payroll service that will withdraw the taxes and pay the government automatically. With this service, there is no temptation by  a "cash strapped" small business owner to spend payroll tax money they collected, but belongs to the government.
  2. Non payment of sales tax. With each transaction, a company collects sales tax for  the government. It is then the companies responsibility to remit these funds to the appropriate agency. A company should ensure that theses taxes get posted to a separate account so the money is there to send at the end of the month.
  3. Non payment of use tax. This is a tax that a company assesses on themselves for product they purchased for their own use where they should have been charged state sales tax, but weren't. This needs to be send to the state typically every quarter.
  4. Health code violations. Run an office that is unhealthy for employees or a location unfit for customers? Inspectors will shut that company down on the spot and lock the doors. This gets much stricter when serving food and beverage or a hotel

In the days when a company's online reputation is critical, getting shut down like this will do nothing but hurt your Yelp and TripAdvisor ratings.




 
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