Scott Gregory, Your Trusted CFO

Simplify Your Bank Rec Process Instantly

If your business accepts credit cards, you may find yourself trying to untangle a real mess at month-end when it comes time to reconcile your bank account.

Why? Because your credit card processor is taking out their fee on each transaction as it is posted into your account. So instead of the full amount of the sale being deposited, a fractional amount is instead. And this can cause all sorts of grief when reconciling.

A BETTER WAY...

Give your merchant processor a call and ask them to take their fees out on a monthly basis instead of on a per-transaction basis.

By doing this, each deposit will clear for the full amount, and then your bank account will only be charged once each month for the total of the merchant fees.

My experience is that most processors will do this for you - but you have to ask. Naturally, they set their payments up on a "per transaction" basis by default since they get paid faster that way!

LOTS OF HAPPY CLIENTS

This one little trick has simplified the bookkeeping for many of my clients over the years.

Do you have troubles or concerns with your accounting and bookkeeping? Contact me so we can discuss things further.

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Alternative Sources of Funding for Small Business When the Bank Says "No"

A recent Wall Street Journal article on peer-to-peer lending for small businesses really caught my attention.

I guess it was just a matter of time until the concept of social networking melded into the business finance area.

WHAT THE HECK IS PEER-TO-PEER LENDING?

In short, instead of getting a traditional loan or line of credit from a bank, your small business could approach a network of potential investors via an online marketplace.

While still very small in the scope of small business financing, the Wall Street Journal article indicates that peer-to-peer lending sites have generated more than $500 million in loans in the past five years.

WHO ARE THE PLAYERS IN THE PEER-TO-PEER LENDING MARKETPLACE?

As with all things internet related, there are many players in this space. Two of the most prominent ones are Prosper Marketplace and Lending Club Corp.

Just imagine these firms as matchmakers - they use the power of their marketplace to match people looking for loans to those who are looking to make loans.

Thus, the peer-to-peer concept.

YOUR FINANCES STILL HAVE TO BE IN ORDER

Just because this type of lending is not driven by bank guidelines, there is still a screening process that borrowers have to go through at these peer sites. Your credit score plays a big role in the overall rating you receive from them and the ultimate interest rate assigned to your loan.

The process of how peer-to-peer lending works in these marketplaces is very simple. Naturally, you will want to do your homework on these funding sources relating to terms, fees and other criteria.

IS THIS SOMETHING YOUR BUSINESS WOULD CONSIDER?

Is this concept too "out there" for your small business to even consider? Have you had any experience with any of the peer-to-peer lending sites, either as a borrower or an investory?

Please share your thoughts in the comments section below - would love to hear them!

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Fantastic Financial Info to Know: Tracking Your Accounts Receivable

Do you sell to your customers on credit?

By that, I mean do you offer some sort of payment terms such as:

• Net 30 days
• Net 45 days
• Net "Hope My Clients Pay Me Someday"

If you do sell on credit, it is essential to the financial health of your business to have a solid system in place to monitor the following information:

• Who owes you?
• How much they owe you?
• How long they have owed you?

THE ACCOUNTS RECEIVABLE AGING REPORT TO THE RESCUE!

If you use QuickBooks or other accounting software, the built-in Accounts Receivable Aging Summary report will be your best friend.

This report quickly summarizes the key details mentioned above for easy review and monitoring as shown in the screen shot below:



Naturally, you will want to build an internal system that allows you to take follow-up actions on anyone that has gone into overdue status (or to even be proactive on invoices about to come due!).

ACCOUNTS RECEIVABLE ARE THE LIFEBLOOD OF YOUR BUSINESS

A simple thing to remember - every dollar that shows up on the accounts receivable report above is a dollar that is NOT in your business checking account. That money is not helping you pay your bills, purchase inventory or meet your payroll obligations.

I know it is difficult to envision playing the "bad cop" and having to contact your customers to collect on overdue amounts. However, if you don't make these important calls, your invoice may very well go to the bottom of the stack. And that is not a good place to be.

ADDITIONAL RESOURCE

The Guide to Getting Paid: Weed Out Bad Paying Customers.. by Michelle Dunn

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Fantastic Financial Info to Know: Profit and Loss Report with a Twist

When it comes to managing the finances of your business, it is essential to be comfortable with certain critical benchmarks.

This "Fantastic Financial Info to Know" series will introduce you to three of them.

CRITICAL BENCHMARK #1 - SEEING YOUR PROFIT AND LOSS WITH A % OF INCOME CALCULATION

Your profit and loss report provides a recap of your income and expenses for a certain period of time, whether it be a week, month or year.

It is also extremely helpful to know not just what the dollars are, but also how all of those line items stack up as a percentage of your business income.

AN UP CLOSE LOOK

The sample report below shows just what a Profit and Loss Report with a % of Income Calculation can look like (click on the image for a larger view):

Using this example, you can quickly and easily see just how significant the various expenses of the business are in relation to the income level.

In a flash, you can see that the job expenses are a bit over 37% of the total income and the payroll expenses are running slightly more than 26% of the total income for the year (this profit and loss report was run for a year-to-date basis for demonstration purposes).

Are these percentages too high? Too low? That is where some historical trends can be very helpful. If you create this same profit and loss on a monthly basis and track some of these key figures, it will then be easy to spot trends (either favorable or unfavorable) in your business finances and then take appropriate action from there.

THE PROFIT AND LOSS WITH A % OF INCOME COLUMN IN QUICKBOOKS

The above report was created using QuickBooks accounting software with just a few mouse clicks and is also available in other accounting software as well.

If you need help getting your QuickBooks organized to provide this type information to you on  a regular basis, contact me so we can talk further about your situation.

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Avoid These 7 Mistakes at Your Next Chamber of Commerce Event

As a past president and current trustee of the Willoughby Area Chamber of Commerce, I see many businesses join the chamber and check the box that says "networking opportunities" as their main reason for joining.

This is a a great goal - unfortunately, it often gets lost in execution by people making these common mistakes relating to chamber of commerce events:

Mistake #1: Sitting with your friends at the event - unless your friends are great referral pipelines for you, make an agreement with them that you need to split up to maximize your networking opportunities while attending the event.

Mistake #2: Sitting with your co-workers at the event - I know it's easy to grab a spot at a table with people you work with - heck, you already know them. But what good does that do when it comes to expanding your range of contacts and promoting your business to others? Your co-workers already know what you do. Share your story with others that you don't yet know.

Mistake #3: Talking about yourself - the entire time - if ever there is a quick way to blow an opportunity for new business, this one is it. I have found that listening first usually pays far larger dividends later.

Mistake #4: Not having a 30 second statement ready about how your business can help the person you are talking to - Granted, you won't be able to offer your products or services to everyone you bump into at chamber events, and that is perfectly fine.

But for those where a good fit may exist? You need to be able to provide a 30 second infomercial about how you can help them or solve their problems. 30 seconds may be all you get. Telling the person, "well, we've been in business for 20 years and serve customers all over the country" doesn't help. Suggesting that "I can help you make QuickBooks less confusing for you and help you work more efficiently with it" is something they will likely remember.

BUT WAIT, THERE'S MORE...

Mistake #5: Automatically putting all your new contacts on your e-mail newsletter list - Unless the person specifically requested to be added to it, automatically adding them to your list is a bad move. If they want to learn more about your business, let them do it at their pace by including your web site and related information on your business card.

Mistake #6: Instantly asking your new contact to join you on LinkedIn - I don't know about you, but adding someone to my LinkedIn community is something that happens after you have gotten to know the person for a while. An immediate request to join their LinkedIn network tells me it's all about numbers and not about relationships.

Mistake #7: Not following up in a timely manner if your conversation calls for it - Ok, so you've avoided all the land mines above and have connected with someone that truly wants to learn more about what you do after the event. Bingo - a prospect!

But then you drop the ball because your system to follow-up with new prospects is completely disorganized or worse yet, non-existent. This is where a customer relationship management (CRM) package really can help you stay organized!

Avoiding these mistakes at your next chamber event can really help you connect with people and grow your business in the months ahead.

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A Missed Opportunity for This Small Business

A print ad for a local catering business slipped out of my local newspaper recently and caught my eye.

The ad was done on glossy paper and had some very attractive photos of their offerings and some limited information about their menu packages. It was a very nicely done ad and I'm sure it cost them a good chunk of change to print and distribute it through the paper.

YOU KNOW WHAT WAS MISSING?

The ad made zero reference to a web site or Facebook page for the business - it only provided a phone number.

And that's too bad, as I think they missed out on really making their investment in this ad pay dividends for them in the months ahead.

A WEB SITE TODAY IS JUST LIKE A BUSINESS CARD USED TO BE

I remember the phrase from a while back "if you didn't have a business card, you were out of business".

Updating that phrase for the digital days we live in, it would read "if you don't have a web site for your business, you may be out of business".

These days, a web site or Facebook page is a must for almost all businesses.

People may not want to call you directly at first. Rather, they prefer to check out the "digital marketing" of a business for more information and as part of their decision-making process to take the next step.

IT DOESN'T HAVE TO COST A FORTUNE

For a company like our catering business, it doesn't have to cost a fortune to put up a basic web site. Heck, a Facebook page is free.

The web site could contain testimonials from happy customers, more details about their menu offerings, hours of operation, payment policies, and most importantly, a frequently asked questions (FAQ) page that summarizes the questions I'm sure people are calling them about every day.

Whether you use a service like Webs.com or a high school student to create the site, the key thing is to get one created and out there for people to see.

YOUR 24/7 MARKETING CHANNEL

Remember, your web site runs all day, every day. It is there whenever someone may be trying to find what you have to offer.

Cross-promoting your traditional print or other ads with your digital properties (web site, Facebook, Twitter page, etc.) is an essential element to your success. After all, that is why you sent out the print ad in the first place, right?

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Is Your Inventory Collecting Dust?

Asked another way, is your inventory tying up precious cash that could be used elsewhere in your business?

As a distributor or manufacturer, it is essential to monitor your inventory turnover ratio, just like you should be doing with your accounts receivable turnover as well.

Here is the formula for calculating your inventory turnover:

Cost of Goods Sold / ((Beginning Inventory + Ending Inventory) / 2)

The rule of thumb for your inventory turnover is this:

• The higher the value, the more quickly your inventory is being converted in cash - and that is a good thing!

Need help in getting your books organized properly so you can track this critical information? Click the contact button below and let's talk further about your situation.

For more insight into the concept of inventory turnover, please visit these resources:

• Effective Inventory Management
• EZ Analytics for Inventory from Acctivate - a perfect solution if you are using QuickBooks to track your inventory.

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One Question: Are You Killing Your Chances to Win New Business?

In fact, you may be putting yourself at a BIG disadvantage in winning new business and not even know it!

 

ONE SMALL CHANGE MAY YIELD VERY BIG RESULTS!

Here is my suggestion - get a professional domain name for your business, and set up a professional e-mail address to go with it.

Why do I suggest this?

If you are trying to gain new business from medium to large businesses and they see that your e-mail address is something like "trickydude@hotmail.com" or "flowerchild69@aol.com", savvy buyers will automatically assume that you are a very small and unsophisticated business and likely pass you over for consideration.

Whether that assumption is correct or not doesn't matter - it is their perception that matters!

RULE YOUR OWN DOMAIN

At a minimum, you can purchase your own domain name so that you can present a professional image when competing for new business. Think about it - would the buyer be more comfortable dealing with jim@abccompany.com or "coolguy77@yahoo.com"?

It doesn't have to be complicated or expensive to do this. Check out sites like Network Solutions or Register.com. They help businesses set up their domains each and every day.

Your business may be small, and that's perfectly ok - mine is. But, why put yourself at a competitive disadvantage if you don't have to?

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Join Me for: "Just Because You Say They Are a Contractor Doesn't Mean They Are" Webinar

Register for my webinar to get up to speed on two very critical issues facing small businesses:

• Understanding the New Hire Act and how it impacts your business
• Employee or Contractor: Making the Wrong Choice Can Cost You a Fortune

I am very pleased to have Molly Mulroy for Paycor on the webinar. She'll cover the New Hire Act and what it means to your business.

I'll be covering the "employee or contractor" topic with insight to help you understand what is involved in making the best decision on this important question.

IT'S FREE

The webinar is free!

In addition, it will be recorded for playback in the event you can't make the live webinar.

REGISTER NOW!

Take just a second to register for our webinar on the New Hire Act and Employee or Contractor issues.

Look forward to seeing you there!

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Why Is It You Do Your Own Payroll and Not Outsource It?

When it comes to very low value and potentially high risk business activities, doing your own payroll ranks right near the top.

According to SurePayroll, over 40% of small businesses receive an average tax penalty of $845 per year. OUCH!

Unfortunately, over the last twenty-five years I have witnessed many small business disasters that have resulted from making the fateful decision to do payroll in-house.

BUT IT'S EASY TO WRITE THE PAYCHECKS!

This is one of the main comments I hear from business owners when talking about payroll. Or said another way, "gee, how hard can it be to write the paychecks to the employees"?

Of all the pieces that go into a business payroll system, I would very much agree that creating the paychecks is by far the easiest part of the puzzle.

YOUR PAIN COMES WITH THE DEPOSITS AND FILINGS

Do you have a payroll expert on staff? (the answer is likely no).

If not, who is going to keep you updated on the massive amount of payroll laws and timetables you need to keep track of? How do you know you are filing the right forms at the right times and with the right people?

Just for giggles, sit down and figure out just what the schedule should be to make your federal tax deposits. Oh, and by the way, are flexible spending accounts taxable for state or local tax purposes? Might as well review the rules on those too. Got a migraine yet? (no fair asking your neighbor in the business suite down the hall - they very likely have most or all of wrong...)

You see, the real pain of doing payroll yourself is normally felt one to three years AFTER the payroll was processed. This pain becomes intense when you get the letter from the tax agency that indicates you were either late in filing or didn't deposit enough. Or worse, both of them! Get out the checkbook - it may likely be time to pay up (though the IRS isn't always right either...)

Just one of these notices will more than likely wash away the "savings" you thought were automatic by doing your own payroll.

PUT THE STAFF ON VALUE-ADDED ACTIVITIES INSTEAD

In addition to the "it's easy to write paychecks" argument I hear, the next most popular sentiment is "well, I'm already paying my staff to be here - might as well have them do the payroll".

If that's the case, maybe they should perform your next cavity filling or oil change too!

All kidding aside...

If you are paying the staff, put them to work on projects that add value to the business. Some quick examples:

• Following-up on overdue customer accounts
• Helping put together your next customer mailing
• Connecting with customers and prospects via social media or e-mail tools

Don't let your business fall into the non-value added trap of doing payroll in-house! There should be plenty of other things for your staff to work on that have a much higher value.

WHO DO I USE TO PROCESS THE PAYROLL?

There are a plethora of businesses that can take care of your payroll. National firms such as Paychex, SurePayroll, QuickBooks as well as local payroll specialists have you covered on this issue. Get a few quotes - you will quickly find that it isn't as expensive as you think it might be.

Even better - the sooner you hand off payroll to an outside processor, the sooner you relieve the potential burden you face for late filings, undeposited taxes, underdeposited taxes and other payroll nightmares!

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