Our Conversation About Finance

BANKING

Problem 1: No one safeguarding/paying close attention to bank account

Money in the bank, or in any account where it can be safeguarded is incredibly important to the livelihood of the business. There is nothing more worrisome and preoccupying to an entrepreneur than the feeling that resources are becoming scarce. Most often, they are the guardian of such accounts. However, from time to time, especially if they are the ones at the root of the over-abundant money expenditures or worries, they may need the help of your organizational skills.

Solution 1: Being handed management of the money of a business is one of the most important responsibilities you can be given. If you decide to shoulder it, you must remember to be highly transparent with all transactions and to treat the money as if it were your own. If you are a frugal type, you can be of great help to someone who is not cautious at all. Make sure you can give daily and detailed accounting of what you are doing to the entrepreneur. 

Problem 2: Unmanageability in payment recording causes fees or overdrafts

Being asked to send a check out sounds easy enough. However, the balance part is to record the payment. As in most cases, banking is done online, where the system will deduct the check, or payment, directly from the account. Lack of oversight, or a mistake in withdrawal amount, type, or to which account can cause massive fee disasters, which can add up. One of us added up over $3000 in overdraft fees in six months with one of our clients. Oy! What I could do with THAT money!!!

Solution 2: If/when you are dealing with the bank account, make sure that your login is secure and that you take care to log in and out after our check-ins, or when you gather the information you need. Take care to double-check payments going out from any online bookkeeping or payment systems, such as Quickbooks, PayPal, etc. Thoroughness will pay off--for the business and for the trust in the primary business relationship you have with the entrepreneur.

HANDLING MONEY

Problem 1: Accepted payment methods are out-of-date or too difficult

One of us, when asked if we accept a certain form of payment, replied, “This is a BUSINESS. Any good business knows how to take your money.” There is nothing more frustrating as a customer, or more detrimental to a business, to have difficulties or impediments to the customer when they are trying to pay. Money should easily flow into, and out of a business when and where necessary for the growth of that business. It is like a heartbeat where blood flows in and out though different chambers, and goes to the exact part of the body that needs it. 

Solution 1: If he/she is not already, help the entrepreneur learn to use online payment systems. Help them hire a bookkeeper--it will be very much worth their while in time and money. Be available to problem-solve if the information comes in that there was a payment problem for a customer and assist the entrepreneur, if asked, to come up with solutions to prevent this from recurring in the future.

Problem 2: Unhealthy expenditures or waste exceeds income

Money problems are personal and pervasive. If an executive does not keep a tight lid on what comes in and goes out, trouble will be a-brewing. What we’ve seen a LOT of are entrepreneurs who LOVE signing up for every new app in town. What often happens with someone who is app-happy, is that six months later, they are spending thousands of dollars on things they are no longer using but haven’t cancelled or unsubscribed. When this type of waste is excessive, income will eventually be affected.

Solution 2: If you are involved in banking, invoicing or any type of bookkeeping or banking, stay cognizant of expenditures, especially categorical ones (like apps) that become too numerous or expensive. Find a way to carefully point this out to the executive, being clear which ones are necessary and which ones can be discarded. This kind of extra attention and care around their income is just another way you earn your value...and then some.

Problem 3: Money “issues” negatively affect business flow

We’ve touched on this slightly in the first two problems, but let’s elaborate. Negative habits around money can destroy a business, no matter how good the idea, or how well-received the product or service is by its audience. Unnecessary extravagance can be tempered but an entrepreneur who has contributed so much time and money of his own may become very defensive in such a conversation. 

Solution 3: Do your own due diligence around the way you handle money flow. Be a better guardian of money decisions and expenditures than he/she is for the business. Ask questions on how you can help-given the nature of your organizational skills (and frugality). Always remember, no matter how hard it is to watch this type of destruction, and knowing that you could be out of a job--it’s just NOT your money.

GENERAL BOOKKEEPING

Problem 1: Unmanageable bookkeeping functions due to lack of A/R application

Without understanding the flow of any business from sale (invoice) to payment (deposit and application), any bookkeeping function may seem unmanageable. Once you lose sight of the flow from A/P ledger to account, you can easily lose sight of the assimilation between a bank balance and a Quickbooks balance. 

Solution 1: Pay attention! Double- (even triple-) check your work until you develop a system that works for you. Report in and manage your own duties carefully. 

Problem 2: Lack of organization creates frustration over bookkeeping functions

Bookkeeping itself is a “checks and balance” system. Simply put, one transaction is always reflected in two areas; this is the balance. If you do not have this organization or balancing act happening (and being checked) frequently, you are likely to create frustration for the executive who needs to know clear numbers, sometimes in an instant. 

Solution 2: Do research on systems to help you maintain a “checks and balances” system. Record things in three areas to begin with. Monitor discrepancies, especially in ongoing payments. If you find a mistake, make sure to make a note to pay close attention to this same charge in the next month’s reconciliation.

INVOICING

Problem 1: Online payments don’t reconcile with bank account

Online payment processing systems such as PayPal give choices as to how to send and to whom, which include what fees are paid by whom. If you are tasked with sending any payments in this way, it’s important to get clarity on how to send and what category, if any, should be included. Remember that an online invoice processing system, well-managed, can really help reconcile books ongoing and file taxes at tax time.

Solution 1: If not you, make sure only 1-2 people are managing or making payments. Send reports to the entrepreneur frequently. Ask questions if you are not sure how to handle a payment, or who should be paid what amount for what product or service. Make sure the online payment system has money in the account, and inform the executive if the balance is running low, especially remembering to find out what card or account to default to if the online payment system balance is too low. 

Problem 2: Fees are too expensive

These days, and more than ever, NOTHING is free. The good news is that most fees are low and if you know how to get around them, you know how to save money, which could be a highly sought-after skill for executives that are not organized, or are spendthrifts. For most of us, who are frugal, but enjoy our money too, we know that we spare no training or awareness in helping “balance the books”.

Solution 2: A good example of how to make the “least” of fees is to understand timing of payments. For example, using PayPal, if you want to move money from their system to your bank, you will pay a fee if you want the money immediately. If you can wait 1-2 business days, you pay NO fee. Although the fee may be only a few dollars, those dollars add up. It’s not so much about the fees, it’s about that you know these things and they will make you very valuable if you can be clear about how this knowledge helps you help the entrepreneur. 

Problem 3: Payments are being sent out under the wrong expense category 

Disorganized categorization is a surefire way to lose sight of where the money is going. It’s also a way to disclude things in ways that create a foundation for loss and a lack of accountability with money. Many people, especially an entrepreneur who wants to pay himself, or someone else quickly, make foolish mistakes. You, or whomever is responsible for PayPal, will be required to be more vigilant. 

Solution 3: If you do not understand the way categories work, ask your boss or someone else who is more familiar with bookkeeping and expense category functions. Create, or offer clarity for the categories as soon as you take over a payment system. We feel that more communication and questions up front are key to avoiding problems later. 

TAXES

Problem 1: Filing incorrect forms

It’s hard, as business generalists, to elaborate much in this area. Providing examples--when we or the entrepreneur have typically delegated this work--is a bit out of our reach. However, we can definitely be clear on one point...you need to do your homework for whatever you’re involved in which, in this area, could be sending in forms for the entrepreneur.  

Solution 1: We mostly find that helping pull information and numbers from software and apps are the way we have been most helpful. We have also been held responsible for sending forms and packets off in a timely way. This is where the work throughout the year with bookkeeping and online payment systems and bank accounts will pay off--especially if the person you work for is disorganized with money. 

Problem 2: Filing too late or paying too many filing fees

As was mentioned above, paying MORE fees is not the way to go, especially when rash decisions or actions around money on the part of the executive can create chaos. Keeping your pulse on how to help with money can be a challenge if the one you work for has issues. Typically, we have found that those who spend a lot, or complain a lot about not having money are wasting it exponentially in several miniscule places that add up.

Solution 2: Find out where you can be most helpful. Look out for fees not mentioned in proposals. Pay attention to monthly changes that change, which may mean a new fee was tacked on that the business was not made aware of. Be ever diligent in your accounting of fees and make sure to address it immediately with whomever is charging the business so it can be quickly rectified. 

Need more help? Coaching with Nicole is available at a 50% discount to TPPA students. Visit: https://thepowerhousepa.podia.com/the-powerhouse-assistant-coaching for more information.