Running a small business can be one of the most exciting things you do. With all the freedom a small business provides, successfully managing both expectations and most importantly, finances can really keep you on the right track. Here are a few tips to leverage when managing your small business finances.
Separate Your Personal Finances From Your Business FinancesIt is important to know that blurring the lines between personal and business is never a good idea. Your company is its own independent entity. Keeping your personal finances separated from your business will not only reduce problems in the long term but also make it easier to manage and keep track of your finances. One of the main reasons you should separate your business from personal finances is for tax purposes. The IRS allows business owners to claim deductions for business-related expenses. In order to successfully claim deductions, you must provide clear documentation that indeed the expenses were indeed business-related. Using your personal bank account to pay bills can be very risky. Instead, you can transfer money into an account in the name of your business as needed, which is called capitalizing your business. If there is no clear distinction between you and your business, creditors are able to claim your personal assets in order to satisfy a debt so consider opening a business bank account ASAP if you haven’t done so already
Use a Business Credit CardOpening and making regular payments on a business credit card can help begin to build your business credit. Having a good credit score affects your business’ ability to qualify for increased credit lines, loans, office leases, equipment, and better terms from vendors. In addition, business credit also impacts your business insurance cost. While there are a multitude of credit cards for which you can apply, we recommend reading our latest blog post to find the best business credit cards for your particular situation.
Pay Bills on TimeMissed or late payments on your business credit can have serious consequences. One of the most common penalties is late fees. The average cost for late fees on a credit card ranges from $26 to $39. Over time these fees can add up. Making payments on time affects your credit score as well. In fact, 35% of your credit score is based on payment history. The graph below shows a breakdown of the different factors that can affect your business credit score.
Choose the Right Accounting SoftwareManaging your business accounting can be an overwhelming task especially if you are tracking documentation manually. Having accounting software eliminates the guesswork from bookkeeping. FINSYNC allows you to put your accounting on autopilot. FINSYNC syncs with the majority of US banks, credit unions and credit cards. Our all-in-one solution allows you to create customized reports, track income and expenses, accept payments, and automatically reconcile your accounts with the right invoices and bills. It’s easy to get started. Sign up for a 7-day free trial, no credit card required.
Creating a thriving business can be a tough task. That’s why it is important to add efficiency within your operations to make you and your employees' jobs easier. One way to create efficiency is by automating your back office. When you automate your back office, you cut down on processes that require a “man in the middle,” so to speak. It can also remove any human error that employees might introduce. Most importantly, it frees up your employees to focus on what matters most: growing the business. When thinking about financial automation software, there are many advantages such as storing and organizing data, having a single from which to interact with customers and vendors and streamlining cash flow management. Let’s consider some of the many benefits to implementing back-office automation:
Increase EfficiencyTime is one of your greatest assets when running a business. Managing paper documents and tedious processes can slow down your overall operations. When you automate processes like record-keeping and customer relationship management, it can tremendously reduce the time and steps spent on administrative tasks.
Reduce Operating CostsOnce you’ve reduced the overall time on mundane tasks, you also want to make sure you are factoring in all the costs associated with automation. When you automate your back-office, you are able to empower your employees with the right tools, and maximize their output without having to over-hire. For example, when you implement invoicing software, your employees can maximize the number of invoices they produce during their shift. More invoices equals more revenue, while also minimizing the total payroll hours needed to create them. You’ll also save money on software expenses. By migrating from a cloud ecosystem to an integrated platform, you’ll be able to turn off expensive, excess software subscriptions.
Receive Revenue FasterWhen thinking about customer invoicing, a manual process can delay revenue you have coming in the door. Not only that, but it can minimize the overall profitability of your business because of labor costs. By automating your invoicing and accounts receivable, you will make it easier for customers to work with you. For example, automating your payment processing will allow for your customers to pay how they prefer and create a stronger relationship with your customer.
Automate Your Back Office TodayStart improving your business efficiency by automating your back-office with FINSYNC and its full suite of financial automation software. FINSYNC can help you save time, money, and help you offer your customers multiple forms of payments. If you’re ready to reduce inefficient processes and grow your business, start a free trial or schedule a demo with one of our team members today!
FINSYNC was included in this piece published by Hyken.com on July 7, 2020 This week we feature an article by Eddie Davis, VP of Business Development for FINSYNC. He offers tips on how to engage and maintain loyal customers. Ensuring that your customers are satisfied and eager to return is the lifeblood of a growing business. Providing a quality product or service that exceeds expectations is only the beginning. Turning first-time customers into repeat patrons these days is all about communication. Social media, online review portals, email and other forms of digital communications have torn down the walls that once separated customers from businesses. Customers no longer have to accept waiting on hold on a customer service line to ask questions. They can post the question publicly and get responses in minutes. More importantly, they can share their experience using a company’s offerings with the rest of the online world. Rather than shun this reality, savvy businesses are leaning into the opportunities for more direct, instant exchanges with customers as a means to address their questions and concerns, and to glean valuable feedback that can inform their upcoming offerings. Here are some strategies that can help you keep your existing customers satisfied and coming back:
Embrace Customer FeedbackIt’s essential to establish tools and practices that encourage customers to provide continuous feedback. A way to do this is to set up easy lines of communication online and ensure that you respond to customers’ posts quickly. Creating online surveys can be a powerful and inexpensive tool to gain feedback on a new product or service. Let’s say you’re going to make changes and want to make sure they’re working for your customers. Emailing an online survey or including it in a regular newsletter can yield valuable insights. And your customers will appreciate the opportunity to communicate how they feel directly, rather than having to go to an online review portal or social media. With surveys, it’s wise to let customers post anonymously, which ensures they will provide honest answers. It’s that honest level of feedback that will ultimately help you improve your business and customer retention. And speaking of social media, it’s essential to keep tabs on what’s being said about your company on the major sites, especially online review portals. Some customers may look for answers by posting on your own social media pages, which you should be able to easily spot and then provide a response to ensure they’re satisfied. But in many cases, customers will give feedback without directly messaging or linking to your company’s social media account. It may seem daunting to track what anyone is saying about your company online, but there are tools that enable you to automate this task by seeking out when your company is mentioned.
Respond QuicklySeeking out and monitoring customer feedback is only part of the customer retention equation. To close the loop on this effectively, you have to make it a priority to respond on a timely basis, even if it’s just to inform them that you’re working on their request. The goal is to make sure customers feel their concerns are being taken seriously. It also pays to be proactive. Set up a regular schedule of outreach, whether via email or other forms of direct contact, to invite customers to share questions or concerns they may have before you roll out a new offering. This is also a good opportunity to pitch customers on this new product or service.
Reward LoyaltyA customer loyalty program is another tried and true way of increasing customer retention, and digital communications technology has made this easier than ever. Something as simple as discounts earned through points accumulated from previous purchases or even for filling out online surveys will serve as a tangible reward that your customers will come to appreciate and factor into their purchasing decisions. And, let’s be honest, such programs are increasingly expected by customers. A loyalty program will pay off in the end, because studies show it can cost five times more to acquire a new customer than to retain an existing one. And according to one study, a 5% increase in customer retention can increase profit by more than 25%.
Offer Flexible Payment OptionsConvenience, whether in the form of delivery options, product returns and exchanges, or customization, gives customers more reasons to stick with your business. The same principle applies to payment options. Technology has led to many innovations in how we access our funds and pay for goods and services. Offering flexible payment options can make the difference between landing a customer or seeing them go elsewhere. This is especially the case with younger consumers, who have become accustomed to using apps to make purchases. This doesn’t have to be expensive or onerous. Intuitive payment platforms make it easy for businesses to accept check, ACH, debit or credit card payments — even if you don’t have a merchant account set up. Focusing on staying adaptable with payment methods, social media engagement and other forms of technology-driven outreach shows your customers that you’re keeping their needs and preferences in mind. And that goes a long way to ensuring they keep coming back. Eddie Davis is the VP of Business Development for FINSYNC, a consolidated cash flow management platform focused on helping businesses grow. FINSYNC’s intuitive online tools help automate payments and accounting and provide valuable insight through cash flow analysis. The lending network gives businesses access to fast, affordable financing. Connect with Eddie on LinkedIn and follow @FINSYNC on Twitter. Please visit Hyken.com to view the original article.
Most large corporations have some debt as a standard financing practice. Depending on the economic situation, debt financing can be far cheaper than investor financing. But for many small businesses, having to service debt each month can mean the difference between taking home a paycheck or not, hiring one more employee or working extra hours, or paying your bills on time. Cash is oxygen to small businesses, so you can, and should, pay down your debt. Here are several ways in addition to sacrificing income, new hires, and personal time.
The US Small Business Administration (SBA) Debt ReliefFrom the SBA website: “The SBA will pay 6 months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020.” If you have one of these loans, you do not need to apply for this assistance. According to the SBA, assistance will be automatically provided as follows:
- Loans not on deferment, SBA will begin making payments with the next payment due on the loan and will make six monthly payments.
- For loans currently on deferment, SBA will begin making payments with the next payment due after the deferment period has ended, and will make six monthly payments.
- For loans made after March 27, 2020, and fully disbursed prior to September 27, 2020, SBA will begin making payments with the first payment due on the loan and will make six monthly payments.
SBA Economic Injury Disaster Loans (EIDL)On June 15, the SBA announced that the EIDL program is open again. Small business owners in the US, including Washington D.C. and territories, can apply for an Economic Injury Disaster Loan advance of up to $10,000. This loan advance will not have to be repaid. Recipients do not have to be approved for a loan in order to receive the advance. The amount of the loan advance deducts from the total SBA loan eligibility.
Corporate AssistanceThat’s right: corporate America is helping out America’s small businesses. Here are just a few examples of US enterprises lending a helping hand to small businesses. While such help is generous, keep in mind that it is in these corporations’ best interests to help out the small businesses that put money in their bank accounts. For example, Morgan Stanley's Brian Nowak estimates small businesses comprise 30% to 40% of Facebook's overall advertising base.
- Facebook is offering U.S. small businesses $40 million in grants to help them navigate the coronavirus crisis. Go to facebook.com/grantsforbusiness to determine if your business is eligible. They also rolled out additional features to help small business owners. Facebook now lets business owners to start a Facebook personal fundraiser for their own business. So they can ask their most loyal customers for help with operating costs during the crisis. In addition, they made it easier for businesses to communicate temporary service changes — like changes in open days and hours — to their customers.
- Lowe’s has put up more than $50 million in various types of relief funds for small businesses since the COVID19 pandemic hit the US. In this latest round of funding, the company will “offer small business grants through some of the company's key partners. Including its supplier diversity network. The funds will also expand support to small business home improvement professionals.”
- Vistaprint, Facebook, Verizon, and others offer grants that can help keep your small business afloat during the coronavirus crisis. Companies can qualify for these grants if they have 3 - 20 employees. Located in an economically vulnerable community, and have been impacted by the COVID-19 crisis.
- Finally, here’s a guide of all the companies (as of this writing) offering small business assistance in many different ways to help America’s small businesses weather this storm.
As of this writing, the rollout of the SBA PPP (Paycheck Protection Program) is 2 weeks old. From everything we can gather, at this time, hundreds of thousands of "small businesses" have applied for a forgivable SBA PPP loan. The SBA continues to issue "guidance" in the form of Frequently Asked Questions and answers. The headlines continue to ring with negative news about the rollout, including one that says the SBAs computer systems crashed and another that said the SBA is struggling to meet the demand for these loans. That shouldn't surprise anyone, given the speed and size of this program rolled out by the Federal Government. The SBA is responsible for $349 Billion in loans to small businesses, but the banks, credit unions, and other lenders are the entities who have to actually do all the intake for the loans. The SBA PPP is a big, huge, government program, and it's going to have lots of issues. There are more than 30 million small businesses in the United States today. How many of them are suffering in the wake of COVID-19 and the corresponding government shut downs? A LOT! We're trying to make the process a little easier on everyone.
The All Encompassing SBA PPP Guide (free download)We've created a simple, but thorough guide to the process from the borrower's (small business) perspective, answering the following questions:
- What is the SBA PPP?
- Who is eligible for an SBA PPP Loan?
- What can you use these funds for?
- How much can you borrow?
- How do you calculate how much you can borrow?
- What info do you need to apply for an SBA PPP Loan?
- What amount of the loan is forgivable?
SBA PPP Explainer VideosYou can download and read the guide, or get the shorter (slightly more entertaining) version in this video on youtube. It literally answers exactly the same questions as we've listed above. Also, we're sharing more videos almost on a daily basis as we learn things that will help both borrowers and lenders.
Calculate Your Average Monthly Payroll CostsWe've published a calculator (MS Excel & Google Sheets) for small businesses to use to calculate their average monthly payroll costs and to give to their lender to provide thorough documentation of their average monthly payroll costs. You input your numbers, and the calculator generates your maximum loan amount. Remember, the SBA PPP help small businesses through about 2 months or so of payroll to keep employees employed, so your business can stay in business after the pandemic has ended.
Apply for sba ppp loan onlineWe've created (what we believe is) the easiest online SBA PPP application in the world! OK, let's not get carried away, but it's really good. So, if you're a small business, you can apply using our online application. If you're a lender of any kind, and you're struggling with the volume of applications, you can adopt ours. We made the process plug and play for lenders, really easy to get started, and we're standing by ready to help you get onboarded so you can accept more applications and fund more loans. Apply online for an SBA PPP Loan here.
Virtual accountants and bookkeepers to help youFinally, last year, we rolled out our virtual accounting and bookkeeping services, and we've got a network of over 400 vetted accountants and bookkeepers ready to go to help you get through this application process. We base our matches for you on these criteria:
- Accounting Needs
- Business Objectives
- Bookkeeping Requirements
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