You close your eyes – and slowly brush your hand across your forehead. Your stomach starts to get butterflies as you type your username and password into your bank’s website. You take one more deep breath. Then, you hit “enter.”
Maybe you’re pleasantly surprised by how much money is in your bank account. Or, maybe your account balance is so low that you ask yourself “Where is all my money going?"
If money seems to always leak out of your bank account like water flowing through a sieve, here are five ideas to help you solve the mystery of your firm’s disappearing money.
1. Budgeting – A Business Owner’s Best Friend
Maybe you’re one of the lucky business owners who don’t have to worry about balancing your checkbook. Your business is so flush with cash, there’s never a doubt that there’s enough money in your bank account to cover the purchase you’re about to make.
But what about the rest of us? Business owners hate the word "budget" just as much as the word “taxes”. It’s annoying. It’s tedious. It can also lead to a dramatic increase in the financial health of your firm.
Here’s what budgeting isn’t: “Tightening the purse strings”, “not having fun”, or “never splurging on something fun.” Rather, the concept behind budgeting is this – give every dollar that comes into your business a job.
You don’t have to do this yourself – delegate it to your office manager or controller, or someone with a knack for understanding numbers.
2. Accept EFT and Credit Card Payments
Maybe you can’t completely get rid of checks as a form of payment from your customers. Paper checks, however, are another step in the money-tracking process where something can go wrong.
Make electronic funds transfers and credit card payments an option for your customers – and maybe provide an incentive for using these payment methods.
3. Proper Segregation of Duties
Trust – but verify – those employees who have access to your cash. Whether it’s a company credit card or dipping into your petty cash account, make sure expenses get pre-approved and receipts get immediately turned in. And the same people who have access to your cash or credit cards should never be the same people that are responsible for reconciling your bank accounts. Which leads us to our next point…
4. Look at Your Bank Reconciliation
You’ve got a big business now. You can’t do everything yourself. That’s why you hired someone to take care of your firm’s bookkeeping. What’s the one thing, though, that you should never delegate? Looking over your bank account’s reconciliation report. Notice I didn’t say you had to do the rec yourself. This can still be done by your bookkeeper or accountant. But you should absolutely look over the reconciliation report prepared by your accountant. Ask questions if you don’t understand a transaction or if something looks out of place. This needs to be done – at a minimum – once a month (preferably once a week).
5. Get Your Employees Excited About Timesheets
One of the most unpleasant surprises for a business owner is writing a check to cover payroll that’s much, much larger than expected. Don’t let the biggest expense of your business become an unpleasant surprise.
Use a solution such as BillQuick to help keep track of how many hours your employees are working – so you can decide when to add more hours or cut back – or if you can even afford the hours currently being worked. Getting your employees excited about communicating to you how they spend their time means crucial information will be at your fingertips when trying to determine if a project or client has truly been profitable.
BQE Software offers intelligent project management and billing solutions for professional services industry that are designed to help increase performance and productivity through streamlined processes and integration. Check out BillQuick for more information.