Budgets for financial control
By Willeen Hasler, SCORE Counselor
Starting a new business or expanding one brings a massive number of things to do and not nearly enough time to properly attend to all of them. But one task that must be given priority is installing and maintaining controls on both income and expenses. Lacking controls may cause your modest funds to be frittered away while you remain oblivious to an oncoming catastrophe. That thing coming at you from the end of the tunnel is a reminder from your friendly banker that your account is overdrawn!
SCORE-San Diego has several counselors with accounting backgrounds, and report numerous cases where an otherwise promising business hits the skids due to poor financial controls and oversight. Your friendly banker is not receptive to pleas for bail-out loans based on a failure to manage in the first place.
Income Controls
To prevent many personal checks from insufficient funds, always require personal identification and, if they are not a regular customer, make sure they write down both home and work telephone numbers on the check. Make copies of received checks before depositing them no later than 10 a.m. the following day to start its clearance quickly. You may also want to charge customers $20 or more for returned checks to cover your cost.
If you sell to businesses, you generally have little option but to offer credit. Be sure to check out the firm's credit and payment record with credit references before extending your own. If you sell to the public (or to businesses), it is best to stay with bank credit cards and an approval system only.
Budget Controls
New businesses must summarize weekly to make sure spending is under control. (This includes requiring all employees to present receipts for businesses lunches showing clients and business discussed, or other purchases, rather than using the cash drawer if you have one.) Always pay for business expenses with business checks or credit cards rather than cash, which will keep your records straight for everyone. Overhead is an area that can cause problems for inexperienced business owners. Overhead is all continuing costs (not goods to be sold) that are paid on a recurring basis. These could include rent and utilities, insurance, salaries, telephones, office supplies, etc. Many new businesses can crash when the timing and regulation of cash flow is badly amiss.
Budget weekly and carefully to make sure cash flow meets cash outgo. For help with this critical task, contact the Carlsbad Chamber of Commerce for appointments at (760) 931-8400.
By Willeen Hasler, SCORE Counselor
Starting a new business or expanding one brings a massive number of things to do and not nearly enough time to properly attend to all of them. But one task that must be given priority is installing and maintaining controls on both income and expenses. Lacking controls may cause your modest funds to be frittered away while you remain oblivious to an oncoming catastrophe. That thing coming at you from the end of the tunnel is a reminder from your friendly banker that your account is overdrawn!
SCORE-San Diego has several counselors with accounting backgrounds, and report numerous cases where an otherwise promising business hits the skids due to poor financial controls and oversight. Your friendly banker is not receptive to pleas for bail-out loans based on a failure to manage in the first place.
Income Controls
To prevent many personal checks from insufficient funds, always require personal identification and, if they are not a regular customer, make sure they write down both home and work telephone numbers on the check. Make copies of received checks before depositing them no later than 10 a.m. the following day to start its clearance quickly. You may also want to charge customers $20 or more for returned checks to cover your cost.
If you sell to businesses, you generally have little option but to offer credit. Be sure to check out the firm's credit and payment record with credit references before extending your own. If you sell to the public (or to businesses), it is best to stay with bank credit cards and an approval system only.
Budget Controls
New businesses must summarize weekly to make sure spending is under control. (This includes requiring all employees to present receipts for businesses lunches showing clients and business discussed, or other purchases, rather than using the cash drawer if you have one.) Always pay for business expenses with business checks or credit cards rather than cash, which will keep your records straight for everyone. Overhead is an area that can cause problems for inexperienced business owners. Overhead is all continuing costs (not goods to be sold) that are paid on a recurring basis. These could include rent and utilities, insurance, salaries, telephones, office supplies, etc. Many new businesses can crash when the timing and regulation of cash flow is badly amiss.
Budget weekly and carefully to make sure cash flow meets cash outgo. For help with this critical task, contact the Carlsbad Chamber of Commerce for appointments at (760) 931-8400.