accounts

A great way to impress new customers (and keep your business covered).

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A good way to make a great first impression is the new customer packet. This should be printed on business grade paper (not copied-go visit you local quick printer-and get at least 3 quotes), and sent in a good looking envelope. What should be in your new customer packet? Here are some ideas.

1) A credit application. The credit application allows your business to legally pull a commercial credit bureau and should outline your company’s terms and conditions. It should ask for 3 trade credit line lenders, and a commercial bank check (on a separate form) both of which should be signed by an officer of the customers company. This document obligates the customer to pay invoices in the terms that you permit.
2) A sales tax exemption form or reseller certificate from the appropriate state. This is an absolute must for any company in any business but retail or retail food service. If your company is doing business to business commerce you must obtain this document!
3) A request for a freight guide. This is especially crucial for your small to medium business if you are conducting business with a Fortune 1000 type company. Other wise, your company’s invoices maybe delayed by the freight auditing department or your company fined for not following the customer’s guidelines (or probably both)! This also creates more expense as your company’s accounts receivable department (or yourself if you are just starting out) must now pursue the deduction for pay back which will most often be denied.
4) A welcome to your company. This is a sales and marketing document. It thanks your new customer for their order, and lists appropriate contact people. Who should be included: the main sales contact, customer service lead, credit representative or manager, and yourself-the owner. This document should include all appropriate business cards (included in packet)!

Follow these steps, and your company can reinforce your excellent first impression and ask for new orders. This lets your customer know that they are dealing with a classy organization no matter the size. All customers appreciate class, and this is a way to let them know that your company values their business. Remember to request that the packet be sent back complete if at all possible.

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Sales Tax exemption certificates: Yes, you must keep track of it!

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Sales Tax exemption certificates: Yes, you must keep track of it!

In my business career I have seen this happen three times: Once I was a credit manger, once as a major account sales rep, and once as a financial consultant, companies that sold products out of state and did not keep exacting records of sales tax exemption certificates. In two of the three cases, the result was devastating for the business. The state sales tax commission team audited the business and heavy fines were imposed along with sales tax in arrearage including hefty late fees. Then it seemed all the neighboring states-through some miracle of unhappy coincidence sent their sales tax audit teams in as well (although they swore they never tipped off the other states, yeah right!). It was a major contributing cause for two of the three businesses to end operations!

So what to do? If yours is a new business, include a sales tax exemption certificate with every new account package which should include a signed credit application and a request for a freight guide. If you are the owner of a small business make this part of your day before your employees start working! I have found sending the new account package works best if you send this to your customer’s controller. This is generally a very visible person of director level who will know where to route this very important paper work. Also, if the controller has any questions about your businesses policies and practices, he or she will generally call or have an appropriate person call to “iron out” any details. Send these out by mail since most will require a signature and request that the packet returned complete (so you only have to handle it once). For the record, I am a huge fan of “if you touch it, you scan it” (if it comes to you in paper form). Many of these tax certificates will come to you via email-save them to a CD and store a copy off site. The same holds true for the certificates that are mailed or faxed, scan them then save them to a CD, and store a copy of the CD off site. Keep a log of every packet that your business sends out (an Excel worksheet should be sufficient), and check them off as they return. Later as your business grows you may delegate this to a trusted employee like an office manager and later the company controller.

Following this simple practice of keeping sales tax information up to date can keep you company in good standing with the state and prevent costly and heartbreaking audits for your small or new business.

Looking for a GeoVison Security Camera System to help secure your small or medium business? Call www.CameraSecurityNow.com today at 877-422-1907 for a free phone consultation. Ask about the new Hybrid DVR/NVR surveillance solutions.

How to get paid for the products you sell

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Many business owners bemoan the situation that they have made many sales but have little money to show for them. They then continue that it takes forever to be paid for their product. When this happens, it is good to question “are my invoices going out correctly, and do they match what is on the customers purchase order?”

Professional commercial credit people call this controlling the front end of the accounts receivable. This is how you can trouble shoot like a senior commercial credit analyst and get your small company paid in a timelier manner.

When you take on a new customer, you as the small business owner need to read the purchase order. Make special note of things like freight, terms of payment, billing address, part identification numbers, and purchase order numbers. Persons not directly involved with procurement in their companies might tell your company sales personnel a great many things (well meaning), but these practices will only slow your invoices from being paid, or may get the invoice sent back to your business for correction and clarification (this restarts the payment clock). If the practice continues, this makes your accounts receivable department work harder and eventually expand, making the business less profitable! Here are some simple ideas to help your business avoid the pitfalls:

1) On freight, always offer collect the customers carrier-not pre-paid and add (this can trip an audit from the customers freight department).
2) On terms of payment, make sure they match or call the buyer to get them changed if possible.
3) On part identification numbers, make sure they match.
4) On the billing address, if this does not say attention accounts payable begin to question sales and customer service people.
5) On the purchase order, check the number to make sure it’s correct. If it is a blanket purchase order number, It will need a unique release number.

Doing these small inspections can help your small business collect its receivable more quickly. It can make your invoices go through your customer’s accounts payable with a minimum of inspection, and your accounts receivable not have to collect it. This means more profit for your business!

Looking for a GeoVison Security Camera System to help secure your small or medium business? Call www.CameraSecurityNow.com today at 877-422-1907 for a free phone consultation. Ask about the new Hybrid DVR/NVR surveillance solutions.

Is your business behind the money curve?

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Does your business have a nice sized A/R but little money to show for it? Is your company accounting manager always ducking collection calls? You may be behind the money curve. Here’s how it happens:

You may have a few large customers that name their own credit terms or just pay slow. The key ratio that every business owner should know is days sales outstanding or DSO. DSO measures how long it takes for an invoice to be turned into cash. Your accounting manager can calculate this number for you or you can find the formula here:

http://www.investopedia.com/terms/d/dso.asp

The idea as the business owner is to turn your receivable into cash as fast as possible, the larger the DSO number the longer it takes. All business have creditors and suppliers and the problem is when your business pays out faster than your finance department can collect the receivable, in consumer terms, you’re upside down. How can you speed up the process?

1) Motivate the collection staff-If you really want to know where the problems are with your business, take a trip to the credit/collection department. Good credit people will usually have a solution as well. I know it’s not in vogue in these economic times, but offering a bonus for cash collected is not a bad idea. In fact, it’s a very good idea.
2) Offer a cash discount-This is giving some of your profit away but it motivates your slower paying customers to pay, it may be worth the 1 or 2 percent discount.
3) Factor your invoices-Selling your invoices to a factor also takes away profit, but you get your cash over night. Factors are great financial advisors since they are in “the money game” every day.
4) Transfer some of your risk to someone else-This strategy is probably for a medium business. Some business set up a dealership network to service certain accounts. They sell their product to a middle main who then deals with the slow paying account. The middle man then charges a premium for the product or service because he knows he’s going to wait to be paid.
5) Try to get some of your money upfront as a down payment (medium to large companies will resists this strategy so be prepared)
6) Take credit card payments-this is another strategy to get paid in a very short time, just make sure you read the agreement very carefully.

Looking for a GeoVison Security Camera System to help secure your small or medium business? Call www.CameraSecurityNow.com today at 877-422-1907 for a free phone consultation. Ask about the new Hybrid DVR/NVR surveillance solutions.

Why you should treat “the Temp” well or the $14, 465.63 postage stamp

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To borrow from an old TV show, the story you are about to read is true; the names were changed to protect the innocent (and guilty). As you hire people as your business progresses from small to medium, some times you make hiring mistakes. One of these can be the person who brings all their personnel baggage with them to work. Let me say, from the bottom of my heart, you can’t get rid of these people fast enough! They bother co-workers, whine at supervisors, bully subordinates, and treat temps or contractors with distain which leads us to the story of the “14,465.63 postage stamp.”

Many years ago (over 20) I worked (as a contractor) for a company we will call “Ramshead.” Ramshead had let its receivables run amuck for a while and when they were audited, the HQ gave them a marching order of “clean this up!” Ramshead contracted with a major accounting temporary firm to have 4 A/R specialists come out help them: Big D (me), Billy Bob, Steve, and Jill. We were escorted to a back office to tables (no desks), set up with phones and an aged trial balance, and told to collect all the past dues. We were in the same office as Tracy T (nicknamed tsetse fly-by the company’s founder-Mr. Jones)-the “A/P girl” whose goal seemed to be making everyone else’s life miserable by taking/ making many personal calls from the office and by bothering co-workers, whining at her boss, she had no subordinates, but she did treat the temps with obvious contempt.

Over the course of the 6 month project Jill was married and moved out west, and Steve became a cost accountant in Louisville, so for the last couple of months, it was just Billy Bob and I. Billy Bob had a great deal of experience with the auto industry and some good contacts. Billy Bob had taken on a special project to get about 15K of hopelessly messed up invoices paid. This was something that Ramshead personnel had little knowledge, but Billy Bob had succeeded in getting “buy off” to pay from a big 3 automaker. Our last day there, Billy Bob and I went to lunch and we when returned (and were going to pack up and leave early) there was Tracy T (TseTse) with a sour look on her face. “I understand that Anna in the mail room is letting you send in your time cards through the company postage meter,” she said flatly. We answered “yes,” she extended that courtesy to us. Tracy then proceeded to state that she was “revoking that courtesy,” and stomped off to “speak with Anna,” adding that if we were going to run our time cards through the postage meter, to “either leave 22cents, or go buy a stamp.”

Billy Bob and I stood there in stunned silence, but then Billy Bob spoke. “I had one thing left to do before we left here, mail the packet of big 3 invoices (there were about 20), but I am not going to do it now.” Instead Billy Bob flipped on the company’s paper shredder and proceeded with great delight to feed each corrected invoice into it. We then walked out the door; shook hands, and drove off. I never saw Billy Bob again; he had spoken of moving back to Atlanta.

About a month later, I received a call from the agency asking me if I had seen or heard from Billy Bob. I replied no, and related that he had spoken of moving back down south somewhere. I inquired why. Well, Ramshead was under the impression that they were going to get a large payment from an automaker and it never showed up. Snickering in my coffee, I said, “well, you will have to talk to Billy Bob, he was working it.”

The high maintenance employee had cost the company fifteen thousand dollars! I later heard from one of the sales people at Ramshead that it was rumored that Mr. Jones the company founder suggested to human resources that they find a reason to “swat the tsetse fly” and that she was finally terminated.

I know the in vogue thing in HR theory is to constantly rotate your bottom 20% employee, but for me if you have a high maintenance employee, get them on the express train out of your business, or your company too might buy a $14,463.65 postage stamp!

Looking for a GeoVison Security Camera System to help secure your small or medium business? Call www.CameraSecurityNow.com today at 877-422-1907 for a free phone consultation. Ask about the new Hybrid DVR/NVR surveillance solutions.

Mint Money Management on the Move

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Mint Logo
I hesitated writing a review about Mint.com because when it comes to money in times like these you simply cannot afford to fall prey to another internet fly by night; but after researching my little review, I have discovered that Mint.com is a quiet and steady freight train that could completely evolve the way we handle our money.

Mint is a money management website where you can view all your accounts in one spot. All you have to do is answer a few questions and give information for each account that you have and then Mint connects to all your accounts and brings all that information to one place where you can generate reports, plan a budget and access where all of your money is going and where to make cutbacks. I know what you’re thinking, giving all your personal account information to a website does sound like a security risk. However, after Mint gathers all your account information and creates a secure, encrypted connection to your account, they no longer keep that information on file.

Mint.com has also partnered with Yahoo! to give you at-a-glance views of your spending, budgets and investments, plus timely alerts, delivered right to your My Yahoo! personalized homepage; and for privacy reasons, your actual account balances are never displayed.

Mint has a little ways to go before its concept is fully functional, for example not all banks or creditors have joined mint yet; but for the most part I do recommend checking it out. We just might be seeing a development that is going to change the way we handle our finances online.