If you own a small business, many issues demand your time and attention. At the end of each day, do you look back with a sense of satisfaction at a job well done - or do you wonder if you could have made better use of your time? Effective cash management, one of the most critical aspects of running any small business, can save you time and may help improve your profits.
Ask yourself the following questions. Each "yes" answer represents an expenditure of time and money that could be avoided through an effective cash management system.
Do you call or visit your bank to transfer funds back and forth between your cash and business checking accounts?
This task can be eliminated by opening an account that combines checking, brokerage and lending services. At the end of each business day, the available cash in your company's checking account will be automatically "swept" into a vehicle providing interest and dividends. In addition to saving time and effort, your working capital will be invested more quickly. What's more, you'll avoid the overdraft charges that result when manual transfers are miscalculated or delayed.
Do you call or visit your bank to access your commercial line of credit or to make loan payments?
If you can qualify for an integrated line of credit, this task also can be eliminated. In general, your line of credit will automatically be accessed whenever the cash in your cash account is depleted. This process helps avoid overdraft charges and, because any excess cash in your account will automatically be used to reduce your credit balance, helps minimize your interest expenses.
Do you review all your company's business debt card expenses in an attempt to monitor expenses and find ways to reduce them?
When you choose a business debit card account that provides a separate number for each employee who is issued a card, tracking your company's purchases becomes much easier. Some cards even feature individual authorization limits that allow you to decide how much purchasing power to grant each employee. Other possible benefits include delayed debits, which allow funds used for purchases to remain invested longer, and rewards programs that offer free travel and complimentary business items.
At the end of each year do you comb through your expense records looking for tax deductions?
Some cash management accounts enable you to code your checks as they are written, which lets you categorize the expenses in your monthly and annual account statements. This can help save your company money that would otherwise have been lost on each overlooked deduction and makes the process much more efficient.
Do you try to calculate all the activity since your last monthly statement when determining if you have sufficient funds to take advantage of an upcoming business opportunity?
A cash management account with Internet access can provide you with complete account information that is accessible at any time from your personal computer, which can help you take more timely advantage of future business opportunities.
Do you manually process customer payments and prepare deposit slips before hand delivering them to your bank?
A lockbox service can perform these services for you, accelerating the collection of your receivables. After receiving your customers' payments in the mail, the financial institution providing your lockbox service will clear the checks, enter the deposits into your account and prepare a detailed statement. Using a lockbox service can cut days off the time needed to turn your receivables into cash.
Do you mail or deliver charge and debit card sales records to your bank?
Electronic card-processing services can eliminate this chore and take over your daily and monthly record keeping tasks. Your accounts will be reconciled daily and the information transmitted to your financial institution through a point-of-sale terminal. Monthly summary statements are also generally provided. Moreover, card payments can be automatically credited to your account and begin working in your cash sweep vehicle as soon as possible.
Do you prepare your own payroll?
This tedious, time-consuming task can't be avoided, but it can be handled by outside professionals. Even small companies can save money by outsourcing their payroll processing. In most cases, a professional payroll processor will calculate your payroll each pay period; prepare employee earnings statements; handle direct deposit arrangements; determine and deposit federal, state and all other withholding taxes; and file quarterly and year-end tax returns for your business. All these steps can save your company time and help avoid payroll mistakes plus late or inaccurate tax filings.
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An effective cash management system can save a tremendous amount of time for owners of most small- and medium-sized businesses. If you choose a system designed specifically to meet your company's needs, you may also be able to add to your bottom line.
