Money Management Sebastian Hesse

Opening a Bank Account You need to have a bank account. Its easy, selecting the bank you want to work with, call to arrange an appointment to open an account, when you go make sure you take personal identification, the next step will be to deposit funds into your new account.

Bookkeeping There are two ways to do this, do it yourself or hire an accountant/bookkeeper. Or you can do both by keeping your own books and hiring an accountant to prepare year-end financial statements and tax forms. If you choose to keep your own books, make sure you buy accounting software such as QuickBooks because they're easy to use. Accounting software allow you to create invoices, track bank account balances and merchant account information, and keep track of accounts payable and receivable. If you don’t want to do it yourself you can hire a bookkeeper to do it for you. To find an accountant or bookkeeper in your area, you can contact the U.S. Association of Chartered Accountants or the American Institute of Professional Bookkeepers.

Accepting Cash, Checks and Debit Cards You must provide customers with many ways to pay, including cash, debit or credit card. There is a cost to provide these payment options-- account fees, transaction fees, equipment rental and merchant fees based on a percentage of the total sales value. Not all banks, merchant accounts and payment processing services are the same, and fees vary widely. Cash is the first way to get paid, which is great because there's no processing time required. The major downside is that cash is risky because you could get robbed or lose it. In cases like that, collecting from your insurance company could prove difficult if there's no paper transaction as proof. Even if you prefer not to receive cash, there are people who will pay in cash, so get in the habit of making daily bank deposits. Checks also have a risk and you must check that the dollar amounts and dates are correct. So that you don’t get ripped off. Debit is another way but it does have a transaction fee.

Opening a Credit Card Merchant Account Many people are using credit cards more and more for buying goods and services. This is especially true if you plan to do business on the web because credit cards and electronic cash are used to complete almost all web sales and financial transactions. To offer customers credit card payment options you will need to open a credit card merchant account. Get started by visiting your bank or credit union or by contacting a merchant account broker, inquire about opening an account. Credit card payments can be paid online, over the telephone, by mail, and in person. But all these benefits come at a cost, you'll have to pay an application fee, setup fee, purchase or rent processing equipment, software, pay administration and statement fees, and pay processing and transaction fees ranging from 2 to 8 percent on total sales volume

Online Payment Services They allow people and businesses to exchange currency electronically over the internet. These accounts allow funds to be transferred electronically among members. The advantages are that they're quick, easy, and cheap, and you can receive payment from any customer with an account. You can have the funds deposited directly into your account, have a check issued and mailed, or leave funds in your account to draw on using your debit card. The only real disadvantage is that most services redirect your customers to their website to complete the transaction.

Establishing Payment Terms You need to establish a payment-terms policy. Setting payment terms covers deposits, progress payments and extending credit. It's important to establish clear, written payment terms with clients prior to providing services or delivering product. Your payment terms should be printed on your estimate forms, included in formal contracts and work orders, and printed on your final invoices and monthly account statements.

Securing Deposits If you're run a service business, you have to ask clients for a deposit prior to providing services, especially if the work also involves product sales that have to be paid for by you in advance. The deposit should be for at least the value of the materials. Your order form or contract should have the deposit information clearly stated. Information on canceled orders or contracts and your refund policy should also be on your forms. Securing a deposit is your best way of ensuring that basic out-of-pocket costs are covered should the customer cancel the job or contract.

Progress Payments They are also a way to ensure that you do not leave yourself open to financial risk. Prearrange your contract and payment terms. Agree on the amount that will be due at various stages of the project. You can use percentages to calculate the progress payments. Or you may arrange for more concrete progress payments based on indicators that are relevant to the specific scope of work, the job or the services provided. Regardless of the system you use, progress payments on larger jobs can dramatically lessen your exposure to financial risk.

Extending Credit Only used if you deliver a service such as pest control that's billed monthly or a major contract that is completed in stages. When a transaction is complete you should be paid in full. If you do extend credit make sure to conduct a credit check first, especially when large sums of money are at stake. All well known credit bureaus compile and maintain credit files on just about every person, business and organization that has ever applied for credit.

Debt Collection The first rule of getting paid is to keep in contact with your debt client, and keep pressuring them to pay you through telephone calls, letters, and personal visits. You cannot legally intimidate clients (but as they say if the cops don’t know do it). Another option is to hire a collection agency to collect the outstanding debt. Collection agencies generally charge a percentage of the total amount owed as their fee, which can range up to as much as 50 percent. If they do not pay your final option is to take the delinquent account to small-claims court. Filing fees vary by state and province as well and these must be paid upfront. But if you win the fees are added to your award. As a rule of thumb, small business owners that take people to court for debts generally represent themselves, since lawyers cost to much for small rewards. Even if you win that does not necessarily mean you will be paid the amount you're awarded. But you will still have to chase the debtor through garnishment of income or seizure of assets to get paid.