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5 Important Steps to Setting Up a Business Management System
March 23, 2016
By: Stacy Yu
One of the most important steps in setting up a business is establishing a sound and robust money management system. How you collect and manage incoming revenue from clients and customers has a lasting and profound effect on the health of your business. When developing a business money management system, here are some important steps every small business owner should take to build a robust system.
Set Up a Business Account
With every business, come monetary transactions. That means, every business needs a safe and reliable place to keep business related funds. Before launching your business, decide where you would like to store your business finances. It is strongly advised that all business owners, including sole proprietors, open a separate business account to house there funds. This will help keep accurate records of all business related transactions, while simplifying financial reporting.
Arrange Bookkeeping Services
Keeping careful records of how you manage your business financials is key to operational success and growth. Determine how and who will be responsible for managing the recording of your financial activities. Many small business owners choose to manage their own books using one of the several commercial software packages currently on the market. This can work well, especially when the business is in its infancy. Once the business begins to grow, hiring a bookkeeper or accountant may be a great solution for keeping up with your financial recording, while making better use of the business owner's time.
Decide Payment Terms
Depending on what type of business you own, determining payment terms can be tricky. Before opening your doors, determine how your customers will pay for your services. Will it be per product? Per hour? Flat Fee? Will you require a deposit? How long will your invoice cycle last? The answers to these questions will set up an important framework for managing your monthly cash flow.
Set-up Payment Methods
Cash and checks are great payment methods. However these days, having a form of credit card or electronic payment is becoming the norm, even for small businesses. Decide on what forms of payment you will accept. Once payment methods have been determined, be sure to set them up properly. Ease of doing business, including payment methods, can be a key factor in the success of any growing business.
Determine Late Payment Methods
For all businesses, late payments are inevitable, so plan for it. Determine what process you will follow in both communications and payment collection. How you handle the situation can greatly impact the future relationship with the late paying customer.
Need more advice? Check out just some of MAFCU's many business tools and contact one of our experienced business relationship managers on questions you may have about your business.