Looking After the Money in Your Business – The Role of People Who Are Doing Your Numbers

If you want to create a business that works for you, you need to know how to get the right people in your financial area – because they are the people, or person, that’s most going to assist you to make more money!

RECRUIT SPECIALISTS TO LOOK AFTER YOUR MONEY!
Now I’m going to start by being very controversial here as one of my pet hates is business owners using the lowest trained person in their business to do their figures. This is usually a very lovely administrative person or the receptionist. Although this person may be the loveliest people in the world, they are not specialists in money. Your Money!

It sounds like a contradiction when I spend a lot of time talking about dumming down the systems in your business so you can hire anyone to run them. And that’s true. But, your financial affairs are THE most important thing in your business. Because without it, you don’t have a business. So treat it with the respect it deserves. If I said to you to get your butcher to do your books, but give them an operations manual to help them, you would think I’m crazy. Yet many business owners are quite happy to hand their books over to an untrained person, who is usually also the lowest paid person in the organization, to provide them with the most important information on their business.

You may argue that it’s only data entry – but have you not heard the saying “rubbish in, rubbish out”? It can cost you thousands of dollars and many hours of angst if this person gets it wrong. Pay attention! If you walk away with nothing else during our time together, it must be this. Do not use anyone other than a trained professional to look after your money.

Believe me, $1 saved now will cost you $100 down the track when you’re trying to fix it. Not only that, but it can take up a lot of headspace and time that you could be spending marketing your business.

BUT I DON’T NEED SOMEONE FULL TIME!
If you don’t require someone full time, then there are many options available to you, including outsourcing to someone like a bookkeeping specialist, if you only need someone on a part time basis.

No matter whether this person is internal or external, that is an employee or a contractor, it’s imperative that you provide this person with the training to ensure that they are consistently entering and processing your financial information. You need to train them in your financial systems. There are a couple of reasons for this:

1) Firstly, it means that you have an understanding of the financial aspects of your business. I can honestly say that I’ve done every job in a business – that’s way I can spot a discrepancy at 100 paces. And without that in-depth know-how you’re flying by the seat of your pants – which is dangerous.

2) Secondly, it means that you know what information you should be asking to ensure that you keep your finger on the financial pulse of your business.

3) Thirdly, you will then know if something is not right. You’ll know IN ADVANCE if you’re not going to make a profit so you can make some adjustments to ensure that you do make profit. It also allows you to keep track of your money – rather than relying completely on someone else to make sure that its all covered off, then finding out when its too late that it’s not.

LEARNING THE HARD WAY ABOUT THE IMPORTANCE OF YOUR FINANCIAL MANAGEMENT!
So don’t learn this the hard way like one of my clients did. And I’ll share with you his story so you can see that it doesn’t always just happen to someone else. This is the story of a client I worked with a couple of years ago who was as keen as you were to abdicate his responsibility around financials – so that he could focus on a more exciting area of his business – sales and marketing.

My client had a successful business where he employed a girl to do his books – he was very excited because she was a bit of a girl Friday. She could manage reception, book clients in, handle all the administrative side of the business, then to top it all off, she could also do the books in his business. She was so good that she had a complete handle on all the finances. In fact, she was so trusted that she also became a signatory on the bank account. That just mad it so much easier, because that way she didn’t have to bother him to sign the cheques. She just did it all.

Then one day, she didn’t come to work and no-one could get hold of her. After a morning, he was puzzled, after all she had never not rung in before. At the end of the day, he was concerned that she had been involved in an accident or something equally awful had happened to her. At the end of the second day, he was starting to panic. At the end of the third day, he was sitting at the desk in his office looking at the safe, when his heart stopped and he suddenly found it hard to breathe. No, he thought, she couldn’t have flitted off somewhere. He opened up the safe and found no money or cheque books – not even the old ones. He then started up the computer and found that the hard disk had been wiped.

There were no financial records anywhere. In a panic he searched invoice files – they were all empty. He then went to the toilet and vomited. When he picked himself up off the floor, he went to his desk and rang the police.

Two months later, his business folded. About a year later, the police had found the ex-employee and filed charges where were eventually pleaded down and she served a suspended twelve month sentence for stealing. Without the necessary business records, it was near impossible to determine how much she had actually stolen. But this business owner had lost nearly everything. Not because he didn’t have a great business – he did. But because he abdicated his authority as a business owner and thought someone else would save him.

Now, if you think I’m trying to scare you – you’re right! Because although this will not will happen to everyone, and generally speaking most people are honest, even at a level where everyone is honest and doing the right things, what happens if your financial controller or book-keeper leaves your business and you have to then find out where things are at financially.

So, in summary, you need to determine who the best person is in your business to take care of your finances. And as outlined in some of our HR audio programs on how to build a team of extraordinary people, you need to clearly outline and define the roles and responsibilities of this person, as well as their key performance indicators, or KPIs – even if they’re external to your business.

By Tabitha Wellman, CEO, Innova Business Momentum, [http://www.innovabusiness.com]

Tabitha Wellman specialises in business process development. She uses her business acumen and technology background to develop internal systems and processes that vastly improve a business’s internal efficiencies and intellectual property. These systems and operations manuals can then be used to ready a company for franchising, enhance growth strategies, assist in listing companies, or to place a business under management to derive passive income.

What’s Your Business’s Credit Score? Why is it Important?

You begin building personal credit from the time you start making and spending money. All of the efforts you put in to keeping your personal credit sparkling clean is important so that you can get the credit you need when big purchases are needed, or when you have unexpected expenses that need financial backing. However, using that great credit rating to back your business is not smart. You risk too much by using your personal finances and family’s resources to boost your company. Even if your family’s budget can afford to keep the business running, any falter, or failure is likely to cause hardship, and possibly financial ruin.

Another reason, beyond the possibility of financial collapse, for separating your personal finance from that of your business is inquiries. The number of inquiries your credit gets has a negative impact on your score. Typical personal accounts are not hit that often with credit inquiries unless you are actively seeking financing. When you own a business and set up vendor accounts, lease land or office space, borrow or buy equipment, and many other times, your report will be looked at, adding to the number of inquires on the account. Making your business credit separate keeps all of those inquiries off your personal credit score.

Instead of taking chances with your personal credit and financial future, you should separate your finances from that of your business. That means starting with a blank slate for your company, though, and may mean it is impossible to get financial help. Once you successfully make the division between your money and your business’ money, you need to build its credit rating and guard it as carefully as you do your personal credit.

Business Credit Scores

If you already keep track of your personal credit score, as you should, you already understand the idea behind credit scoring. Those numbers you are accustomed to will throw you for a loop when you begin to track your businesses credit scores, though. The markers are not the same. Personal credit scores are rated from 300 to 850 with a good score being 650 or better. Business credit scores are rated from 1 to 100. A credit score of 75 or better is excellent.

The Big Three

Just like in your personal credit reporting, there are three major business credit reporting companies. These three credit report companies work the same as they do for personal credit. Two of the business reporting companies you will recognize, as they have a division that your personal debts are reported to: Experian, and Equifax. The third, Dun & Bradstreet, is a major force in business finance, and has many advantages and benefits for small business owners.

- Dun & Bradstreet

Dun & Bradstreet provides a wealth of information for business owners. The articles, reports, and services are of special help for small business owners who do not have the advantage of large in-house accounting staff, business experts, and financial advisors. Even if you have professional help and business counseling, those sources are not available to you at all times the way corporate employees are for their employers. It is in the best interest of a small business owner to make it their business to learn all they can on top of relying on the help of professionals.

The small business solutions section of the Dun & Bradstreet website offers podcasts, articles, white papers, and many other resources for all businesses. Industry experts from all areas of business finance develop the information provided on the Dun & Bradstreet website. Dun & Bradstreet is a highly respected credit reporting agency as well. Financial institutions use their information to determine whether to give loans to businesses of all sizes.

- Equifax Small Business Financial Exchange

The Small Business Financial Exchange (SBFE) provides credit cards, financial backing, and other backing for small businesses. Equifax is a partner with the SBFE and provides a credit background for any small business seeking credit with a SBFE member institution. Because Equifax is such a respected name in credit information, the members of the SBFE rely on it totally as a means of judgment.

- Experian Small Business Reports

Experian Small Business Reports operates the same as Equifax Small Business Financial Exchange in that it offers its members a method of underwriting loans by using a credit scoring system. Both Experian Small Business Reports and Equifax Small Business Financial Exchange are equal in value to the lenders and leasing agents.

Neither Experian nor Equifax offer the many benefits to the small business owner that Dun & Bradstreet provide. Experian and Equifax exist primarily to benefit their members who are the lenders and financers you do business with to get financing. However, registration with them so that you get a credit rating built up is imperative. It is very important to have a good financial credit score with all of the companies in question so that one does not single you out when you need a reference from another.

Beyond the Beginning

Just like with your personal credit, business credit is an ongoing effort. You need to keep a constant eye on what is going on, make sure all entries on your account are accurate, and prevent your business from incurring damaging reports. You need to get regular copies of your business’ credit report so you are aware of what lenders are seeing.

When you set up accounts with vendors make sure they report the good payment records as well as late payments to the credit reporting companies. Make your payments diligently to build up the credit rating that will help your business get loans when needed. Credit is important for other aspects of running your business beyond loans. Any time you wish to lease space, or rent equipment property owners will check your credit worthiness as a way of judging your qualifications.

When To Seek Help

The best way to insure a solid start is to seek professional help when you start your business. Getting off on the right foot can save you many hours of headaches trying to straighten up a mess afterwards. You may never get a second chance to clean up your business credit either. Unlike personal credit that you have a lifetime to work on, make corrections, and recover from a few bad decisions, a business will die when its credit dies. If you cannot recover it fast enough it will not likely get a second chance to develop good credit.

Professional counseling will make sure you truly separate your personal and business finances. It will help you file all the necessary paperwork for the legal issues involved with financial separation. Professional help will also make sure you are registered with all three of the appropriate business credit reporting entities. Professional business credit builders are likely to have a vast network of financial institutions they do business with and your connection to them is easier when your credit counselors open the doors for you.
If you already keep track of your personal credit score, as you should, you already understand the idea behind credit scoring. Those numbers you are accustomed to will throw you for a loop when you begin to track your businesses credit scores, though. The markers are not the same. Personal credit scores are rated from 300 to 850 with a good score being 650 or better. Business credit scores are rated from 1 to 100. A credit score of 75 or better is excellent.

The Big Three

Just like in your personal credit reporting, there are three major business credit reporting companies. These three credit report companies work the same as they do for personal credit. Two of the business reporting companies you will recognize, as they have a division that your personal debts are reported to: Experian, and Equifax. The third, Dun & Bradstreet, is a major force in business finance, and has many advantages and benefits for small business owners.

- Dun & Bradstreet

Dun & Bradstreet provides a wealth of information for business owners. The articles, reports, and services are of special help for small business owners who do not have the advantage of large in-house accounting staff, business experts, and financial advisors. Even if you have professional help and business counseling, those sources are not available to you at all times the way corporate employees are for their employers. It is in the best interest of a small business owner to make it their business to learn all they can on top of relying on the help of professionals.

The small business solutions section of the Dun & Bradstreet website offers podcasts, articles, white papers, and many other resources for all businesses. Industry experts from all areas of business finance develop the information provided on the Dun & Bradstreet website. Dun & Bradstreet is a highly respected credit reporting agency as well. Financial institutions use their information to determine whether to give loans to businesses of all sizes.

- Equifax Small Business Financial Exchange

The Small Business Financial Exchange (SBFE) provides credit cards, financial backing, and other backing for small businesses. Equifax is a partner with the SBFE and provides a credit background for any small business seeking credit with a SBFE member institution. Because Equifax is such a respected name in credit information, the members of the SBFE rely on it totally as a means of judgment.

- Experian Small Business Reports

Experian Small Business Reports operates the same as Equifax Small Business Financial Exchange in that it offers its members a method of underwriting loans by using a credit scoring system. Both Experian Small Business Reports and Equifax Small Business Financial Exchange are equal in value to the lenders and leasing agents.

Neither Experian nor Equifax offer the many benefits to the small business owner that Dun & Bradstreet provide. Experian and Equifax exist primarily to benefit their members who are the lenders and financers you do business with to get financing. However, registration with them so that you get a credit rating built up is imperative. It is very important to have a good financial credit score with all of the companies in question so that one does not single you out when you need a reference from another.

Beyond the Beginning

Just like with your personal credit, business credit is an ongoing effort. You need to keep a constant eye on what is going on, make sure all entries on your account are accurate, and prevent your business from incurring damaging reports. You need to get regular copies of your business’ credit report so you are aware of what lenders are seeing.

When you set up accounts with vendors make sure they report the good payment records as well as late payments to the credit reporting companies. Make your payments diligently to build up the credit rating that will help your business get loans when needed. Credit is important for other aspects of running your business beyond loans. Any time you wish to lease space, or rent equipment property owners will check your credit worthiness as a way of judging your qualifications.

When To Seek Help

The best way to insure a solid start is to seek professional help when you start your business. Getting off on the right foot can save you many hours of headaches trying to straighten up a mess afterwards. You may never get a second chance to clean up your business credit either. Unlike personal credit that you have a lifetime to work on, make corrections, and recover from a few bad decisions, a business will die when its credit dies. If you cannot recover it fast enough it will not likely get a second chance to develop good credit.

Professional counseling will make sure you truly separate your personal and business finances. It will help you file all the necessary paperwork for the legal issues involved with financial separation. Professional help will also make sure you are registered with all three of the appropriate business credit reporting entities. Professional business credit builders are likely to have a vast network of financial institutions they do business with and your connection to them is easier when your credit counselors open the doors for you.

Why General Liability Insurance for Business Is a Must

Businesses are more prone into law troubles – both the serious and the frivolous kind. There are many unpredictable things that can occur in the course of running a business. This is why it is important to invest in a good general liability insurance that can cover your business in all such legal troubles without causing you financial loss or unnecessary issues.

You can get a general liability insurance policy for all kinds of businesses – be it a community store, major corporation, or even an online business. When you start a venture, you are in charge of the profit, and your employees depend upon you. This means it is very important for you to have your business properly protected not just for your benefit but also for the people who are counting on you for income to support their families.

A general liability insurance thus safeguards you from unpredictable flaws that may lead to legal proceedings. To ensure timely benefits from your policy, you must keep all insurance papers in place and you should also fully understand your rights under your general liability insurance.

Getting a general liability insurance can also be the legal provision in many states to start your business. So before commencing a new business, it is important for you to check with all the local laws to see that you meet the necessary insurance terms. After this has been done, speak to the insurance agent of a reputed company and get a prolonged general liability insurance policy that can get you good coverage at low premiums for the future.

Below is the list of five common legal risks faced by several businesses:

#1 Legal structure: While setting up a business you need a legal structure that comes in a variety of choices. Each choice of the legal structure varies in terms of taxation, documentation, liability, etc. Moreover, the legal structure of a business also determines how the management and operations decisions are to be made. Which is why it is important to understand the benefits and drawbacks of each legal choice. Also, you should be knowledgeable about the structure you have chosen. Any mistake in the legal structure might lead to legal troubles.

#2 Employment law: Employment law cases involving unjust termination and discrimination claims are on the rise. These laws are broad, complex and change frequently. Thus to save you from getting into unnecessary haggles it is important to know and understand the common employment law risks and have a complete employee manual that is followed conscientiously by management.

#3 Security laws: To increase the capital for your business you may take money from investors, and in return they get some type of claim on the ownership or profits of your company. State and central government agencies closely monitor this process, and those who fail to follow the securities laws will have to pay hefty penalties.

#4 Partnership and Succession risks: Business partnerships are common and so is the stories of many such relationships turning sour. In case of an accident, death, disability or other circumstances are nearly unavoidable in the long run. Therefore, It is important for you to plan ahead of times while getting into a business partnership so as to avoid future risks.

#5 Contract risk: Contracts are fundamental agreements that define the relationships between your company and its partners, customers and suppliers, etc. Whether your company outlines the contract or simply executes them, not knowing, understanding or agreeing with the contract terms can result in disputes or even other financial troubles. Moreover, operating on a “communicative” deal with no written terms can result in unmet expectations and costly lawsuits. The best practice is to get all your agreements done in writing well in advance.