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On October 21st, 2016 by Alexander Hubenthal

Financially Fit Fridays 06: How to Improve your A/R Processes

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My very first “job” after college was working for a large corporation in the Accounts Receivable department collecting payments from customers who were paying invoices sent by the company I worked for to the customer. Getting timely payment from customers is not a new problem but there are things you can do to reduce time and lots of frustration during the collection cycle. I have learned and applied these tips by both working for large companies and small start-ups.

  1. Improve your invoicing processes: This can be achieved in a number of ways; for example, if you use an accounting platform, you can create standard invoices, create brand recognition for your company and you can also send invoices directly to your customers through the accounting system. Want to know what my go to accounting system is? Click here
    1. Do your best to not back load your month with invoicing. This will create a lot of pressure to collect payment from customers towards the end of the month and leave a big question mark on your cash flow if your invoices are not collected on time
    2. Invoice as soon as you complete a job or when your services have been completed. Why? Depending on what method of accounting you’re using in your software (preferably the accrual method), you will be able to recognize revenue sooner. Also, customers are much more likely to pay when an invoice is received shortly after services are rendered than a week, 2 weeks, or even later (please don’t do this 😱).
  2. Offer payment discounts to your customers who pay within a certain time period.
    1. Standard payment terms depending on what industry you operate in range between 30-60 day net payment terms. What does this mean? If payment terms on an invoice are net 30 days, that means you will owe the balance due on the invoice within 30 days.
    2. Standard discounts on invoices will look like something similar to “2/10 net 30”. No that is not some wacky accounting formula or February 10th. 2/10 stands for a 2% discount applied if payment is received within 10 days of the date of the invoice. You can have 3/15 or whatever you see fit to incentivize your customers to pay sooner. If the customer doesn’t pay during the discount period, they are expected to pay net of the invoice balance within 30 days given the 2/10 net 30 example.
  3. Offer Subscriptions
    1. As the internet continues to become more mature, more and more businesses are turning to the subscription-based business model. This business model alone reduces 90% of the frustration of issuing invoices and collecting payment from customers. There are plenty of integrations such as Bill.com that will automate this process for you. You will only need to intervene if a customer hasn’t taken the action to update their credit card information. I listed this one last because if you are a services based business and not an online one, it might be difficult to implement this business model into your business. But it is a wonderful option for plenty of other businesses.

What do you do to incentivize your customers to pay quicker? Do you do something unique to your business that you can share? Let us know in the comments:

On September 23rd, 2016 by Alexander Hubenthal

Financially Fit Fridays 02: Is Your Business Balanced?

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With so much talk today about "work-life balance" and everyone having their own opinions on this topic, I find it a little humorous that we don’t talk about balancing our business’s books as much (enter sarcastic smirk here).

All jokes aside, one of the most important activities to be completed by a business owner or a bookkeeper is to balance the accounting books on a regular and frequent basis. This can be done easily through your accounting software whether it be an online subscription like Xero who I am a certified advisor for or a desktop based solution that you use.

How do you balance your books? I’m glad you asked. But before we go there, we need to discuss a little accounting theory. I promise it will be a lot less painless than your college accounting course. The balancing of the accounting books is rooted in the fundamentals of accounting. In accounting, we use something known as double-entry bookkeeping/accounting. We also use very technical terms such as “Debits” (on the left) and “Credits” (on the right) and we need each item to have an offsetting account for example:

As you can see, we had Sales of $500 and subsequently we also received $500 in cash because of those sales (let's assume we didn't accept credit cards for your services in this example). This is an example of a journal entry in the books using double entry accounting. Every account (Lawncare Sales, Cash, etc.) have their own definitions as to whether they are a Debit or a Credit. To make your head spin just a little bit more, every account (Cash, Sales, etc.) can be both a Debit or a Credit depending on what activity is occurring in the business.

Luckily in our technologically advanced world, we have accounting software that performs the majority of these functions without us business owners and entrepreneurs needing to know all the intricacies of accounting and bookkeeping to stay afloat.

Ok. Now for how we balance our books. In your accounting platform, the accounting software will pull charges in from your bank (Also known as the bank feed. If you don’t have this set up, shoot me an email and I’ll be happy to see if I can help you out) and attempt to match them up to the correct accounts based on your Chart of Accounts. Then you or your bookkeeper will step in to correct and post the journal entries to the ledger. This at times can be a very time-consuming process especially if you don’t do it frequently or if you haven’t done it in a very long time; if ever. One of the big benefits of having your own bookkeeper for your business is because you have a professional who is knowledgeable of the accounting systems and how all of your charges need to be posted. I recommend reconciling your bank account and balancing your books at least weekly. However, the more frequently you reconcile and balance your books, you will have more visibility and you will be able to identify financial issues as they arise.

What did you think? Have questions? You are always more than welcome to shoot me an email at alex@bookscaping.com or if you need to sat aside some time, you can set up a meeting with me in less than 30 seconds by going here http://bit.ly/2cbTikp

What did you think? If you have comments, ideas for future posts, or questions you want answered, post in comments or send me an email and I’ll incorporate it into the list.

On September 16th, 2016 by Alexander Hubenthal

Financially Fit Fridays 01: Why are we here?

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It’s funny sometimes how things can come full circle in life. A perfect example of this is why Bookscaping was started. Back in the good old days of high school, I had 3 things; a coupe Honda Civic, a lawnmower (loaned to me by my parents), and lots of ambition. That is all I needed to start a small lawn care business and learn what it takes to manage a business. I can remember when I got my very first customer, I was so excited to be able have something real that was mine. But before I went over to my first job, I went over to Office Depot to pick up an invoice pad so I could fill it out and I remember looking at the “Payment Terms” section of the pad and thought to myself, what the heck are “Payment terms”?! Here I was, having my own small lawn care business and not knowing the first thing about accounting and finance.

You might be asking why am I telling you this story; well, fast-forward 10 + years, add on a degree in finance with a focus in accounting, working in corporate accounting, running the finances and operations of a big-data analytics startup company and you’ve got Bookscaping.

I wholeheartedly believe that one of the biggest disadvantages that small-business owners have is a lack of knowledge in how to manage their business’s finances efficiently or understanding the lingo of accounting. That’s why I wanted to give back to an industry that I operated in for a period of time. I’m passionate about the numbers and I have much respect for the hard work that business owners including yourself put into making beautiful spaces.

Fast Facts:

  1. In a study done in 2015 by Intuit (the makers of QuickBooks and TurboTax) found that over half (52%) of small businesses don’t use an accountant or a bookkeeper.

  2. How much time in hours have you put into maintaining your books over the past month? How much is that time worth?

  3. How has servicing your current clients been negatively affected by issues related to your financial records?

I’m proud to say that we only work with landscaping companies. Why? Because we get to learn about all of the inter-workings of the landscaping industry from a financial standpoint and we are able to take a proactive approach to ensuring the success of your business.

Care to learn more about how we can help you or do you just have a one-off question?

Go Here to schedule a meeting with me personally: http://bit.ly/2cbTikp

Or you’re always welcome to shoot me an email at alex@bookscaping.com I look forward to hearing from you.

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