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Almost any small business can use advice on how to improve its collection cycle. The first line of defense against late payments is a complete invoice. Your bills should be accurate, detailed and easy to understand. If difficult to understand, then your client will need to call for additional information. That translates into “you have been added to their to-do list,” which increases the time of your collection cycle. Include on each invoice:

- Your company’s contact information: name, address, tax id number, phone and contact person
- The date the invoice was prepared
- The customer’s name and address
- A description of the goods or services sold to the customer – itemize, if possible (An itemized bill is harder to contest.)
- The amount due, with sales tax amount broken out
- When the invoice is due

Once prepared, send invoices promptly. Another piece of small business advice is the longer you take to bill a customer the less likely you are to receive payment for the goods and services provided.

Many of my business mentoring clients are surprised to learn that the step requiring the most amount of time in the cash conversion process is the time it takes to collect on a customer account. The cash conversion process begins the moment they make contact with the customer, and ends when they have received and deposited payment from that customer; hopefully this cycle repeats itself each month.

The time it takes my business mentoring clients to collect their accounts receivable is measured by the average accounts receivable collection period. The average accounts receivable collection period is an important indicator for determining when their business will be paid for the goods and services it provides.

This simple calculation gives you a powerful tracking tool that helps you adjust your cash in-flow on an as-needed basis:

Step 1: Calculate your average collection period by dividing your total sales for the previous year by 365. This gives you your average daily sales volume.
(Total Sales / 365 Days = Average Daily Sales Volume)

Step 2: Then divide your average daily sales volume into your current accounts receivable balance to get the number of days it takes to collect a bill.
(Average Accounts Receivable Collection Period = Average Daily Sales Volume / Current Accounts Receivable Balance)

Now that you know your average accounts receivable collection period, you then need to interpret that number as it relates to your business by asking four important bookkeeping service questions.

Bookkeeping Service Question #1: Is your average accounts receivable collection period in line with the company’s credit policy? If your credit terms provide your customers with 30 days to pay their bills, then you should expect that your average collection period will be somewhere around 30 days – maybe a little longer. If your average collection period is 60 days then you need to examine other factors that affect billing.

Bookkeeping Service Question #2: Are you billing your customers consistently? Look at your Accounts Receivable Aging Report, the report that summarizes all of your outstanding invoices by client and number of days outstanding. Are the outstanding invoices on that report related to products and services sold within the last 45 days, or are they related to products and services you provided three months ago and just got around to billing? Create a procedure to bill customers once a week or each time you have a completed sale.

Bookkeeping Service Question #3: Are you billing your customers effectively? Are your customers calling you with questions about your invoice? Perhaps you didn’t have that important upfront conversation with your client about how you charge for your products and services. By having this conversation, confusion and anxiety over wondering if the customer is going to pay you can be eliminated.

Bookkeeping Service Question #4: Are you tracking overdue accounts and taking consistent action to collect past due accounts? Do you have an effective tool in place to track when an account comes due, and knowing who has paid their bills and who has not? When a customer’s invoice goes past its due date, is there a procedure in place to follow-up with that customer? Sometimes sending customer statements and making friendly reminder calls is all it takes.

By answering these four basic questions, implementing a few bookkeeping service procedures and heeding this small business advice, you’ll soon be running a fine-tuned collection machine.

Linda Hunt and Laurie O’Neil are the co-founders of The Bookkeeper’s Referral
Network Inc., the place where business meets great bookkeepers. To get your
copy of The 9 Disastrous Mistakes Most Freelance Bookkeeper’s Make in
Business (and How You Can Avoid Them!) visit http://www.bkpr-network.com

Goal setting is crucial to the success of any business, but is particularly important for entrepreneurs in the bookkeeping service business who can become distracted with multiple priorities. Goal setting allows us to be proactive, instead of just being reactive. We’ve all had days where we leap from one crisis to another, but we know that’s not a preferred mode of operation for our bookkeeping services! Goals direct actions, give us something to aim for, and serve as a yardstick for measuring our bookkeeping business’s success.

When setting business goals, I use a successful goal-setting formula that a business coach
mentor taught me. The formula incorporates a strategy or strategies for accomplishing the goal: “I will (goal + performance measure) by (specific actions).”

For example, suppose that you want to increase revenue. First specify the goal: “I will increase revenue this month by twenty-five percent.” Setting a specific goal builds in the criteria you will use to evaluate your success.

In this case, at the end of the month, you’ll either have increased sales by twenty-five percent compared to the previous month or not. Then, specify the strategy that you will use to work towards accomplishing the goal: “I will increase sales this month by twenty-five percent by offering a ten-percent-off sale on all inventory and advertising this sale in the local newspapers.”

This makes evaluating your success or failure easy because your goal is specific rather than general. Suddenly, instead of just having a goal that you may or may not achieve, you have a specific plan to follow to achieve the goal you have set.

If you avoid setting goals, here are a few bookkeeping business secrets for goal-setting success:

Bookkeeping Business Secret #1: Have Short-Term and Long-Term Goals

The first thing I do when setting goals is to consider where I would like to be five years from now. Once I have determined my long-term goal or ideal scene, I work backwards by breaking this ideal scene down into short-term goals and specifying milestones that need to be achieved along the way.

If the task seems too daunting with a five-year plan, establish 90-day goals. Limit goals to three specific things that you want to accomplish. Write out each goal and put a due date next to it. Then write out each step that needs to be taken, by when, and what type of support you need to accomplish that goal. Then schedule in your calendar time to honor the commitment you just made to yourself.

Bookkeeping Business Secret #2: Be Relevant

Goals should help you attain a specific aim. Beware of goals that keep you busy but do not contribute directly to the overall goal you have set for yourself and the success of your bookkeeping business. If you don’t believe your goals are worthwhile, you won’t make the necessary effort to achieve them. For example, several years ago I wanted to work a four-day work week. I set the goal, but did not really believe that I could or should work only four days a week. Guess what? It never happened because I was not truly aligned with the goal.

Bookkeeping Business Secret #3: Review Your Goals Constantly

Review your goals daily. Keep them in plain view – by your desk or next to your computer. Goals are not something that you write down and file in a drawer. The more you embody your goals, the more real they become and the more aware you are of opportunities that cross your path to help you achieve those goals.

I write my goals on colorful 4×6 index cards and keep them by my bedside. I read them first thing each morning and then again before I go to sleep at night. This keeps me focused and moving toward my goals.

Bookkeeping Business Secret #4: Stay on Track

Once you establish clear goals you will begin to notice that opportunities begin to present themselves. When this happens, I ask myself a very important question which helps me to decide whether I should look further into the opportunity or let it go – “Does this opportunity bring me closer to my goal or further away from it?”

By asking yourself this simple question, you’ll be able to take decisive action towards accomplishing your goals. For example, a lovely salesperson from ADP has been calling me to schedule a meeting to show me their services and how they have changed. By asking myself, “Does this opportunity bring me closer to my goal or further away from it?” I have no problem deciding whether or not I should schedule the meeting.

Linda Hunt and Laurie O’Neil are the co-founders of The Bookkeeper’s Referral
Network Inc., the place where business meets great bookkeepers. To get your
copy of The 9 Disastrous Mistakes Most Freelance Bookkeeper’s Make in
Business (and How You Can Avoid Them!) visit http://www.bkpr-network.com

My least favorite thing is ’selling’ my services to potential new clients. It makes me uncomfortable. Then a few years ago, Beth my business coach said, “Linda, why not describe the reasons why someone needs good bookkeeping? Talk about that during your initial meeting.” I was skeptical; I didn’t believe it would work. She encouraged me to try the approach at my next meeting with a potential bookkeeping business client.

Well, I did, and much to my surprise her bookkeeping business advice worked! Not only did that client hire me, but also referred me to two colleagues. The approach I used – and still use – is simply to explain why it is so important to have good records.

Here are nine reasons why it’s important for businesses to have good financial recordkeeping systems. Use one, two or all of them with your next potential new client. Whether your potential client is devising or revising their bookkeeping routine, remind them that the purpose of your bookkeeping business is to help them manage their business tasks.

#1 Reason for Retaining Bookkeeping Services: Monitor the Financial Success or Failure of Your Business
It’s hard to know where you are going if you don’t know where you’ve been. The same is true with your business – it’s hard to know how your business is doing without a clear financial picture. A good financial system provides answers to the questions: Am I making money? Are sales increasing? How do expenditures compare to sales?

#2 Reason for Retaining Bookkeeping Services: Provides the Information You Need to Make Decisions
Evaluating financial consequences should be part of every business decision. Without accurate records and financial information, it’s difficult to forecast the impact of any given course of action. For example, financial information gives insight as to whether or not it pays to hire another salesperson. Accurate records reveal the profitability of any line item.

#3 Reason for Retaining Bookkeeping Services: Obtain Bank Financing
The best time to seek financing is when you don’t need it. The bank will want to see your income statement, balance sheet and tax returns for the most current and prior years, as well as projected statements showing the impact of the requested loan.

#4 Reason for Retaining Bookkeeping Services: Obtain Other Sources of Capital
If your business has reached the point where you need to take in a partner or investor, any prospective associate will want to become intimately familiar with your financial picture. Suppliers and other creditors may also ask for certain financial records. The source of this information is based on your day-to-day recordkeeping.

#5 Reason for Retaining Bookkeeping Services: Prepare a Budget
All businesses should use budgets for planning purposes. Budgets keep businesses on track by forecasting cash needs and controlling expenditures. When companies seek financing, bankers or prospective investors look for budgets as evidence of planning and stability.

#6 Reason for Retaining Bookkeeping Services: Prepare Your Income Tax Return
No matter what your business entity, you must file an income tax return and pay income taxes. With good records, preparing an accurate tax return will be easier and filing will more likely be done on time. Poor recordkeeping may result in underpayment or overpayment of your taxes. If your CPA prepares your tax return, poor records could result in higher accounting costs.

#7 Reason for Retaining Bookkeeping Services: Comply with Federal and State Payroll Tax Rules
If you have employees, you are aware of the myriad of rules and regulations relating to payroll taxes. Payroll tax must be deposited according to strict deadlines. Late payments of payroll taxes result in severe penalties, including jail time!

Payroll tax returns must be filed quarterly, and must reconcile with payroll deposits made during the quarter. At year end, you’re required to give employees and the government W-2 forms, which must agree with your quarterly payroll returns. Sound bookkeeping practices, even if you use a payroll processor, will make compliance with payroll rules easy. Poor records will make it impossible.

#8 Reason for Retaining Bookkeeping Services: Submit Sales Taxes
If you collect sales tax, good records make it easy for you to compute the tax due and prepare the required reports. Sales tax must be deposited according to strict deadlines. Late payment of sales taxes can result in severe and unnecessary penalties and interest.

#9 Reason for Retaining Bookkeeping Services: Distribute Profits
If your business is a partnership, you will need good records to determine the correct amount of profits to distribute to each partner. If you’re operating as a corporation, profits that you’ll be paying out as dividends to the shareholders must be determined.

I encourage you to try this approach. It’s one of the best pieces of bookkeeping business advice that I can pass onto you.

Linda Hunt and Laurie O’Neil are the co-founders of The Bookkeeper’s Referral
Network Inc., the place where business meets great bookkeepers. To get your
copy of The 9 Disastrous Mistakes Most Freelance Bookkeeper’s Make in
Business (and How You Can Avoid Them!) visit http://www.bkpr-network.com

Starting your own business can be a very rewarding experience. You will enjoy freedom and flexibility you never imagined. You will also work harder than you ever have before but it feels completely different when you are working for yourself. Here are some tips to help you get off on the right foot with your record keeping.

1. Keep Receipts For All Transactions From The First Day Onword. If you pay for everything with a check, debit card, or credit card this may not seem necessary. As a tax accountant I can assure you that it is. The IRS will disallow deductions if you do not have receipts to accompany your bank and credit card records.

2. Avoid Cash. I can tell you the easiest way to get into hot water with the IRS is to pay for things with cash and then not have a receipt. For many of us we are in a habit of using cash from the time we were kids. For your own business though, you need to avoid cash.

3. Deposit All Your Income. It is very tempting to withhold cash from your business receipts but I advise you do not. Instead be aggressive with your expenses. If you are in an industry where cash deals are common the IRS will look for evidence of cash deposits in your checking account. If they are absent you will have a lot of questions to answer.

4. Use QuickBooks. Inuit owns 80% of the small business accounting software market and for good reason. Their software is easy to learn and easy to use. Within a few hours after installing you can be producing your own professional financial statements. It is the software I use for my own accounting/tax business and also what I use to produce client Financial Statements and Payroll Reports.

5. Report Employee Earnings Timely. There are several services on the market that will be glad to do your Payroll Reports and process your employee checks. Shop around and get the best deal. This market has become more competitive which means there are some good deals out there for you. For example, if you are in a high risk industry you can get a reduced WCF rate with a company like ADP. With the amount you save in disability insurance for your employees your Payroll Tax preparation expense is essentially free.

6. Use A Business Credit Card. Using a business credit card has many benefits. You can usually find one with no annual fee, 0% introductory interest rate and even cash rewards. But for the purpose of this article one of the primary benefits is for your record keeping. At the end of the year you will receive a summary of all your expenses by category. Give this to your accountant along with your other records at tax time. This will make your accountant’s job easier which should lower his/her fees.

There are many other items to consider when starting your own business and I recommend you speak to an accountant as soon as possible. If you already have someone preparing your tax returns then you can start with them. Make sure they are familiar with hiring your spouse and children, medical reimbursement plans, business plans and entity structuring. Do not stay with an accountant who is not familiar with these because you cannot afford to.

Zach Allred is a tax accountant. You can visit his site at http://www.creditcardreviewsite.com/Business-Credit-Cards/1 to choose a business credit card. You can also visit his http://www.homebasedbusiness-success.com for resources for a home based business and other free articles.

Financial forecasting reminds me of the weather – you make your forecast at a moment in time based upon the information currently available. You draw a conclusion and state your financial forecast. But then, the information changes, now it’s raining, and you’re caught without your umbrella!

Financial forecasting, unlike the weather, isn’t a science but it’s not pure guess work either. It is a combination of:
- knowing your business;
- understanding your marketplace;
- setting goals; and
- using common sense.

As a business coach, I know that every small business needs to make reliable financial projections at one time or another. Forecasting is critical during the following stages of a company’s life span:
- when seeking financing
- gauging the profitability of a new product or service
- determining the impact of staff expansion or cutback
- assessing other business decisions

The many components of forecasting boil down to the following five bookkeeping business tips that for years I’ve shared with business coaching clients:

Bookkeeping Business Tip #1: Review Actual Year-To-Date Results

Start by looking at where you’ve been. If you use an accounting program like QuickBooks you can print out a Profit & Loss statement showing year-to-date results. Check the statement for all financial transactions that occurred up to the date of the report. Reconcile the report to your bank statements. (If you don’t use an accounting program or bookkeeping service, then take the difference of the total year-to-date cash receipts and total expenditures. This should equal your profit or loss.) Examine each line item to make sure that it makes sense – is your year-to-date revenue figure where you anticipated, or has it fallen short? Are expenses higher than expected?

Bookkeeping Business Tip #2: Establish Goals and Incorporate into Your Forecast

What do you wish to accomplish by year’s end? Do you want to introduce a new product or service, increase revenue on existing products or services, decrease spending, hire a new employee, outsource a bookkeeping service, or launch a marketing campaign that will position the company for the beginning of next year?

Write out your objectives and then choose three to five which are the most important to accomplish by the end of the year. Determine the needed steps to achieve the objectives. Which Profit & Loss line items will be impacted? Adjust your forecast accordingly. For example, your goal may be to increase revenue 10% by year’s end or to launch a marketing campaign now so its benefits will be felt in the first quarter of 2009.

Bookkeeping Business Tip #3: Forecast Variable Costs

Variable costs are costs that change in step with revenue change. For example, you are selling more widgets; therefore, your labor costs and materials costs will increase in relation to the revenue increase.

Using the concept that Forecast = Projections + Predictions, combined with the knowledge that variable costs change in step with revenues, forecast each month’s variable costs. Forecast each line item separately. Look for opportunities to reduce costs, and be aware of likely future influences on each cost.

Bookkeeping Business Tip #4: Forecast Fixed Expenses

Fixed costs are relatively stable costs that recur every month. Examples of fixed costs are rent, telephone and bookkeeping service fees. Forecast the month’s fixed expenses by using the same concept used to forecast variable costs (Forecast = Projections + Predictions) and the knowledge that fixed expenses tend to be relatively stable and do not change in step with revenues. Again, forecast each line item separately, looking for opportunities to reduce costs, while keeping in mind any likely future influences.

Bookkeeping Business Tip #5: Forecast Net Profit

The final step is to evaluate your forecast for net profit. Is the profit forecast is reasonable and acceptable? If not, re-evaluate each line item including revenues and make appropriate adjustments. Also, anticipate non-operating income and expense items, and include them in your forecast.

Your financial projections may not be perfect at first, but we didn’t learn to walk without falling down. As a business coach I’ve seen others get a few bumps along the way. But I guarantee that if you follow these bookkeeping business tips, set your financial projections on paper and revisit them frequently, you will achieve your goals faster.

Laurie O’Neil is the co-founder of The Bookkeeper’s Referral Network Inc., the place where business meets great bookkeepers. To get your copy of The 9 Disastrous Mistakes Most Freelance Bookkeeper’s Make in
Business (and How You Can Avoid Them!) visit http://www.bkpr-network.com

Online appointment scheduling technology is bringing new opportunities for time saving especially for small to medium sized businesses. This is basically a time-saving shortcut that avoids staff having to deal with making appointments in the traditional manor.

Web based appointment making is a fast and highly efficient online appointment Tool that removes the need to speak to customers to allow them to schedule an appointment. Your appointment calendar can now be easy controlled with a web based booking system that is not only convenient for your company but also for your customers.

Once your clients become accustomed to online appointment booking they will actually prefer it to the old fashioned method of calling up or even emailing to see if you have a slot available at the time that they want. Web based booking means that customers can clearly and easily see if you have a space in your calendar at a time that suits their needs.

An online appointment scheduler can even allow customers to change their minds and re-schedule an appointment without having to contact you directly. They simply cancel their first appointment and book another at a different time or on a different day, something that is bound to come in useful for many customers who have to deal with life’s little unexpected emergencies.

Online booking can work very efficiently for many kinds of businesses in the small to medium range, they are particularly well suited to a business where there are multiple customers being dealt with at the same time. A very good example of a business well served by online appointment scheduling is a hairdresser or similar types of establishments.

These types of businesses are hectic and run on serving multiple customers at the same time, in different stages of the process. Web based booking will let customers check your schedule and see instantly if there is a free spot when they want it, if there is they can book it there and then without having to call you up. You in turn can see how busy you will be at a certain time on a certain day and book staff rota’s accordingly.

An online appointment tool is very simple, it is intended to be easy not only for the business but also the customer, and if it were complicated it would confuse customers which would not be helpful. So a huge amount of emphasis has been placed on making an online appointment booking system that is very simple and easy to follow so that your customers will have no problems in making a booking.

An online appointment scheduler will make you money because it will encourage bookings and not cost you valuable staff time dealing with appointment inquiries. At the same time it will not seem that you are ignoring customers because the ease of use of the system makes it so simple to make a booking they will soon prefer it over other appointment methods.

SimplifyThis.com lets you quickly and easily invoice your customers, send reminders, and track there payment status with there simple online invoicing solution system. For more information please visit: http://www.simplifythis.com

Although you may have never heard the term web based invoicing software it may be the answer to some of your time efficiency problems especially if you own a small to medium sized business. If you were to add up all the time that you and your employee’s spend each month chasing invoices and payments and making follow up calls. And marking a date in the diary to be sure to call back when the accountant gets back from his break, it would be a very large amount of time that electronic invoicing could have saved you.

Each month the average small business owner spends eighteen percent of his or her time on paperwork, most of that is asking for, or chasing cash that is outstanding. If you could harness all that time you could spend it more fruitfully by making more money instead of trying to bring in what is owed. This is where small business online invoicing can come to your aid and give you back that missing time.

Online invoicing software can automate the entire process it will send out the invoices and allow your clients a simple and effective way to make payments. That way you do not have to wait for them to cut a check and make that days mail. A small business online Invoicing side-steps the ‘check is in the mail’ situation by telling the customer how much they owe and giving them the opportunity to make payment immediately.

Online invoicing is the modern and cost effective solution to payment nightmares. If people are avoiding payment that can always be a problem for any company. But very often what is seen as avoidance is no more than forgetfulness or plain laziness. The client simply can’t get it together to pick up a pen and write the check.

A web based invoicing solution may be the answer to your prayers when it comes to these lazy or forgetful payers. Small business invoicing via the internet gives several key advantages it provides a simple and intuitive interface, so no special training is needed, anyone can make use of this simple system.

These online invoicing solutions offer automated email invoicing and estimates with the option of printed out pdf hard copies for you to keep for your physical records. Web based invoicing will offer online payment collection that takes advantage of payment systems that you customers will be familiar with such as the very popular paypal, regular credit card payments, and even amazon Payments.

That way they are used to these payment options and are familiar with how they work and will not think that they are making payments with some online company that they have never heard of. These familiar brands of payment options are blended with small business online invoicing for a seamless payment solution.

SimplifyThis.com lets you quickly and easily invoice your customers, send reminders, and track there payment status with there simple web based invoicing solution system. For more information please visit: http://www.simplifythis.com