Are you one of those people who are guilty of just stuffing your receipts into a folder and thinking 'I'll sort that out when I've got time'? Do you need a more organised bookkeeping system, nothing too flash, just something that's simple and easy to manage?

Follow my tips below and you'll soon have that simple and easy-to-manage bookkeeping system that won't bring you out in a cold sweat whenever you hear the words 'tax return'. And I promise you, it works!

1. Gather your supplies!

Get hold of a large ring binder, divider cards, A4/letter-sized paper, stapler, pen, all your business receipts and invoices, plastic folders and a large coffee (or whatever else you prefer!).

Then lock yourself away for a couple of hours.

2. Get Organized

You now need to organize your ring binder into the following sections:

Invoices - Unpaid -- this section is for your outgoing business expenses that have not yet been paid i.e. supplier invoices. Write on the top of each invoice the date it needs to be paid by and place all unpaid invoices in 'date to be paid' order with the earliest one on top.

Invoices - Paid -- this section is for your outgoing business expenses that have been paid or you've paid at the time service was rendered, i.e. that ream of paper that you bought from the office supplies store. Staple each receipt on to a blank piece of paper rather than just putting them directly into the ring binder. This just makes it easier to see at a glance all your receipts and you can also make notes on the paper. Also write on the top of each invoice/piece of paper the method of payment.

Receipts - Unpaid -- this section is for all your invoices that you have sent to clients that have not yet been paid. Write on the top date payment is due and put them in date order so that it's easier if you have to chase overdue invoices.

Receipts - Paid -- this section is for all your invoices that have been paid. Write on the top the date it was paid and how it was paid i.e. cash, check, credit card etc.

Bank Statements -- this section is self-explanatory! Just keep everything in date order.

3. Schedule It In

Now that you've got your system in place, schedule in each week/month to keep your bookkeeping binder up-to-date. In between updating place all your receipts and invoices in a plastic folder so that everything is together when you come to update your system--it would be too time-consuming to add each receipt as you get it!

What Next?

Depending on how far you want to handle your own accounts, you can either hand your very organised bookkeeping binder over to your accountant at the end of the financial year for them to prepare your final accounts, or you can maintain your own books with the use of financial accounting software.

Either way, you've now got a bookkeeping system that is simple and easy-to- manage and won't cause you to break out into a cold sweat at the very mention of the words 'tax return'.

Online Business Manager & Virtual Assistant, Tracey Lawton, supports professional speakers, coaches, and authors to operate an efficient, organized, and profitable business. Learn how to create an efficient and organized office in 7 EASY steps, and receive free how-to articles at http://www.OfficeOrganizationSuccess.com.

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On average 25% of the Total Cost of Doing Business is tied to inefficiencies...the waste of time, energy or materials, and I've had many CEOs tell me that 25% is on the low end.

Nobel Prize winner Ronald Coase, of Coase's Law , says that there is friction/costs involved with being in business.There is the original friction or cost of finding suppliers, employees and customers. There's the on-going friction or transactional costs, and then there's the greatest friction of all...the friction of failure.

Prior to entering the training field in 1982 I had a real job as the corporate credit manager for a regional company based in Denver. My duties as the credit manager included the approval of new credit customers and the management (not collection) of past due A/R. I soon found that on average 70% plus of all past due customers had not paid on time due to "something going wrong somewhere." In the process of fixing things that had gone wrong I found that I could identify areas of opportunity for improvement throughout the entire supply chain thus driving down everyone’s cost of doing business.

The New Guy Only Thinks He Learned From the Old Guy Who Only Thinks He Learned From The Dead Guy:

It may not be so in all companies, but sometimes employees and business managers operate like automatons, they repeat how they do things over and over again until it becomes ingrained, and as with any habit thinking isn't required. . And all too often CEOs and top management are complicit if not directly responsible.

If you are a business manager pull out your job description, if you're a CEO pull out your managers' job descriptions and check to see if it/they say anything about "Constant Improvement".

A business manager not focused on improvement becomes an administrator at best and a bureaucrat at worst.

Before improvement/change for the better can take place two thing must happen; first there must be an acceptance or acknowledgment that a business doesn't have to be sick in order to improve, there is always room for improvement.

Then there must be a commitment made as to who will do what when...and the efforts must be tracked and measured.

Change always generates resistance, expect it in others and in yourself. Tell the affected employees of the changes to be made and then ask why the changes won't work...take notes for this will become a "to do" list.

Keep changes small so that people can succeed, but once they mastered a change introduce the next small change...no stress no change.

And of course pay people for doing what you want done...like thinking and coming up with improvements.

An old axiom says that "People respect (do) what is inspected (measured) not what is
expected" .

Can you imagine the chaos that would result if traffic cops were pulled off the roads? In much the same way business managers need to be told that a primary function of their job is to think, to always be looking for ways to save a step, a minute or a penny...and then they must be measured.

Over the years I found that this method for organizing and documenting the knowledge needed to do things as right as possible the first time... worked with any business function.

The Five Organizational Ps

Purpose: Every business function must have a clearly stated purpose which answers the question, "Why incur the costs that go with the function?"

Policies: Goal driven guidelines for each major component within the function.

Process: The step by step method for achieving the goals established by the policies.

People Requirements: The right people for the job based on the process.

Process Monitoring and Performance Measurements: Monitoring key steps in the process to ensure quality and measuring against the goals established by the policies.

If the established goals are not achieved either the process is wrong or you have the wrong guy in the job.

Financial profit is necessary for any business to stay in business and the best way to improve on profit is to do things as right as possible the first time. We will never achieve perfection because things keep changing and that's why Policies and Procedures are never done and we need to place a cover sheet on them that says "UNDER CONSTRUCTION".

One Size Does Not Fit All

Every person on the planet sees things differently, His Holiness, The Dalai Lama says that there are six and a half billion of us and six and a half billion versions of reality and if you're married you know what the Dalai Lama is talking about...it's the same with companies. Businesses are a collection of many different people, none of whom define the business but collectively they make up the business. And what works at one company may not work at another... every company and it's people are unique . The process for best business practices must be based on each company's understanding of what is... is.

In Closing

It was time to rotate the tires on the pick-up and for an oil change and lube, I knew it was time because of the sticker on the corner of the windshield. I've learned it's best to make an appointment rather than just show up at the tire place and have to wait if they're busy...guess what? ...no phone number on the sticker. This is a national tire chain and yet I had to wait and remember to look up their phone number when I got home. If I had been able to call them from the pick-up at the time I'd noticed the sticker I'd might have been able to get in sooner, and at my age they were lucky I didn't space it out altogether. I mentioned all this to the asst. manager when I was checking in and he got it at once...he pulled out a note pad and wrote it all down saying as he did so ,"This is one for corporate, we all use the same stickers." Good for him...now lets see if Big O corporate gets it.

When people are told that on-going improvements are desired and that they will be measured on coming up with them, they become different people.

They find that they are capable of thinking outside the established box and that it gives far more meaning to their work lives, than just a paycheck.

And it drives down the cost of doing business for everyone in the supply chain.

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

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YoungGoGetter: Simply put, buying a business presents a completely different opportunity to owning a business than the traditional “start from scratch” strategy that a lot of us are familiar with. Before jumping in, you get the chance to see how well the business is running before you make a decision. If its something that has passed your screening process and it’s something you are considering, chances are the business is structured well already. Of course, this means that there’s less risk involved and maintaining the business shouldn’t be an insurmountable task, theoretically speaking. As well, with a stable business, most likely a steady positive cash flow will accompany it. When it comes to market share, starting a business creates more competition, whereas acquiring a business maintains the existing market share. As you can see, the benefits of buying a business are clear, but before you head to the bank or go running around frantically searching for businesses, there are a few other things to consider.

Park Place vs. Baltic Ave…

The first thing you have to understand that it’s going to cost you a lot more to buy and existing business than to start your own. Built in to the cost of a business is the sweat equity, the time and effort that the original owner put into the business to start it and get it off the ground. It was them that took the risk for you and spent countless hours developing a foundation and you can expect to be paying for every bit of it. Essentially you’re paying a premium price for someone else to create a business. They’ve already created a brand name for themselves and you’re not just buying the business, you’re buying the brand name too.

Even Matlock Can’t Get You Out of This One…

You can call him up to go over a company’s bookwork with a fine-tooth comb before purchasing it, however there are some things that the books just can’t tell you. A bad corporate reputation or poor customer perception can be something that comes along with the business you bought, and that’s very tough to foresee. You are taking over the business as it is. You can’t expect to know everything about the business without being at the helm of it for some time. Old equipment, operating systems or buildings can end up costing you a lot of money to update, but outdated systems can be a great negotiating tool to leverage down the asking price if they can be uncovered before you make the purchase.

It’s a Little Better Than Working for Your Dad…

Your freedom is limited in the sense that there are current systems in place. For example, specific lease agreements may prevent you from altering any physical specifications of the building. As well, more ofthen than not, you’ll have to live with the location of the business as you bought it. Current customer processes are difficult to change too, especially if there is a lot of rapport with the existing client base and they are used to things being done a particular way. Even worse, if clients took advantage of the previous owner (not necessarily losing money, just not maximizing), it can be tough to retain them as you retrain them. On the other side of the table, you have your employees. You have to be careful not to decrease morale by making the first order of business a change in employee policy. By changing things to your requirements too fast, you can upset the delicate balance of a smoothly running machine.

Would You Miss Your Kid’s First Steps?

This may be more of an ego thing, and granted, this isn’t exactly the same thing as your child’s first steps here, but when you start a business from the ground up, there’s the sense of pride you just can’t get when you buy someone else’s business. The proverbial first steps of a business can contribute to the pride which translates into an attitude, a personality that can be manifested in the way the business is run. Many business owners treat their business like a child, even more so when they created it.

Now is the time that you stop and ask yourself, “Is it right for me?” Like I said, buying a business presents a unique opportunity with limited risk, but there are some snags to watch out for. You may pay a premium for a business you want, but with it comes the hidden items that you don’t. It’s pretty obvious that owning a business is a big deal and shouldn’t be taken lightly. This is definitely something where you need to get your ducks lined up. But, as long as you look at it from every angle a few times over, the decision shouldn’t be that hard. So…….is it right for you?

Shedding Some Light on Buying a Business [YoungGoGetter]

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Brockblake.com: Kent Thomas (CFO Solutions), put together an interesting article called “10 Tips for Recession-Proofing your Business.” Kent provides a much-needed out-sourced financial services for the small & growing business. He has been fantastic to work with and I highly recommend him. Here are the details of his recent article:

1. Diversify Customers. Evaluate your customer base and identify concentrations of customers in the same industry and / or geographic region. Also look at how much business you do with each customer (make a list of your top 10 or 20 customers with total sales in the past 12 to 24 months and calculate the percentage of your total sales that comes from each. Establish a strategy to expand your customer base and to watch the “concentration risks” carefully.

2. Cut costs. If three employees are doing the job of one, you may need to make job cuts. “When times are tough, it’s best to focus on core markets and spend money in those areas, not in areas that haven’t been more profitable,” says Lenhart, the national director of business restructuring at BDO Consulting in New York

3. Ratchet down inventory. When a recession hits, the last thing you’ll want to do is get stuck with shelves of needless inventory. Keep an eye on leading consumer indicators such as those offered by the National Retail Federation and the Conference Board. Also, establish inventory targets and make sure the sales and purchasing departments are talking.

4. Maintain prices. You may be tempted to slash prices to free up cash flow. That’s a mistake, says Bradley J. Sugars, a business coach in Las Vegas. Sure, you’ll sell products but you’ll also cut your profit margins and likely dilute your brand in the process. Plus, if customers decide to buy again from you in the future they may expect similar discounts.

5. Reserve discounts. “Don’t go into a discounting war,” says Sugars. Since you don’t want to dilute your brand’s value and you especially don’t want to start competing on price with discounters such as Wal-Mart Stores and Target.

6. Focus on service. While expanding your business into markets abroad may be avenues for growth, many small-business owners should focus on their existing customers and clients for a boost in revenue. With this in mind, Sugars suggests focusing on service. “It is one of the best ways to add value without costing money,” he says.

7. Invest in employees. When the going gets tough, the employees you have will be your productivity all-stars, says Lenhart. Make boosting productivity within reason, of course a focal point. For those that rise to the top, be sure to reward them accordingly. “You don’t want to lose your most productive people at this time,” he says.

8. Free up cash flow. While you’re attempting to cut costs and grow sales, “now is the time to call in favors,” says Howard Applebaum, chief lending officer of Sterling National Bank in New York. Be sure to free up your business’s cash flow by asking to have payments to suppliers extended.

9. Renegotiate contracts. If a contract, a lease or other obligation will soon be up for renewal, try to negotiate lower prices. At this point, you may be able to also make cuts, says Applebaum. If you don’t need 50,000 square feet of office space, consider paring down. “It is really a reality check that requires a tough look at your expenses,” he says.

10. Look to expand your business. If, on the other hand, you’re sitting pretty, Carmen Bianchi, director of San Diego State University’s Entrepreneurial Management Center, suggests giving the competition a gander. “Look for weaknesses and instability,” she says. If they’ve been having trouble, you may be in a good position to pick up their business at bargain-basement prices.

10 Tips for Recession-Proofing your Business [Brockblake.com]

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I am among the 61 percent of Americans who believe that the US economy is currently in a downward slope, heading towards a recession or already at the point. Consider the astronomical number of foreclosures, escalating real credit card debt, ever-increasing consumer pricing (with particular concern about skyrocketing gasoline pricing and its domino industry effect), lagging personal income, rising unemployment or underemployment rates … and its easy to agree with the pundits who proclaim that all is not well with our recessing economy.

Despite the unsettling news or perhaps because of it, thousands of merchants across our nation continue to blaze an entrepreneurial path, opening up businesses, cutting a swathe along every conceivable niche. Most of these new business owners will realize the necessity to accept credit cards, and consequently, need to establish merchant accounts. (Consumer credit card use naturally increases during difficult economic times and merchants must accommodate their customers preferred method of payment.)

Knowing the importance of obtaining credit card processing capability, merchants engage in an exercise of due diligence in an attempt to find the best merchant account to satisfy their needs. Here are some criteria to consider when weighing options in the midst of turbulent economic
times:

1) Associated credit card fees – This is an obvious consideration, particularly when business profit must be maximized. As comparisons are performed, all rates must be considered, particularly the discount percentage assessed to qualified, mid-qualified, and non-qualified transactions. Of course, other fees come into play, such as start up, monthly, and annual costs. By comparing apples to apples, merchants may reap the seeds of greater profit;

2) Monthly minimum expense – Many credit card companies charge a monthly minimum – a certain amount of processing a merchant must reach to cover the merchant account provider’s cost. For example, if the monthly minimum is $25 and the merchant has only attained a processing amount of $15 (calculated by taking the discount rate times the associated transaction dollar amount), the merchant would be responsible for an additional $10
that month. This can add up over time and take a bite out of crucial
profit. Many new businesses, particularly during slow economic cycles, experience financial hardship during the first year, and it need not be compounded with unnecessary credit card processing expenses;

3) Cancellation or termination fee – While some merchant account providers waive this cost, many assert that it is a valid charge due to the expenses incurred by the processor. But the cancellation / termination fee can run into hundreds or even surpass the $1,000 threshold. While business owners need to maintain a sense of confidence and optimism, the stark reality is that many businesses will fold … and with greater frequency in a depressed
economy. Other merchants may simply grow disenchanted with their present
merchant account provider, and look for a better solution, usually to cut
costs. As such, a cancellation / termination will only serve as a financial albatross to the merchant;

4) Chargeback expense, policies, and procedures – As the growing financial crunch bears its adverse effects to all, there is simply a greater likelihood that customers will initiate chargebacks, disputing a given charge. Merchant account providers typically assess a fee due to the ensuing investigation. Business owners should know what the fee is (the lower the better), and even more importantly, the merchant account provider’s chargeback policies and procedures. Some merchant account providers are very supportive in helping merchants navigate the process; others are very indifferent and may have policies that are not
merchant-friendly (e.g., a tendency to freeze accounts). It is important to find out your merchant account provider’s modus operandi with chargebacks; and finally, consider ...

5) Customer support – Regardless of your choice of provider, it is important for you to learn the facets of credit card processing. Agents must truly enlighten merchants and hasten the learning curve. After all, in difficult economic times, merchants cannot afford to waste time on trying to figure out or solve problems stemming from their merchant account. There must be a quick resolution so merchants can concentrate on their core competency. Any independent sales organization or agent must provide fast, reliable service, and be available for any problems that crop up.

Despite down markets, merchants can recession-proof their business, and one way is to choose the best merchant account using the aforementioned criteria.

Andy Lax has worked in the credit card processing industry for over five years and is now an Account Manager at IntelliCollect, a merchant account provider that enables business owners to accept credit cards and electronic checks.

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This article was provided by Dittman Incentive Marketing, a quality leader in the field of people performance improvement. Since 1976, Dittman has helped companies achieve critical corporate goals via original, one-of-a-kind corporate incentive award programs that inspire sales team motivation, customers to buy more, and others to do more.

Scientists agree that in most people one side of the brain dominates. The right half of the brain controls the creative, artistic characteristics and the left side controls the practical, reasoning functions. Bankers, mathematicians and physicians are directed by a dominant left side. Artists, writers and actors live by the right side of their brain.

Those who successfully create incentive travel programs must be able to call on unusual competencies from both sides, seemingly simultaneously — to call on their ability to be an artist, a poet, a dreamer at one moment and almost immediately transform themselves into a plotter, a planner, a schemer.

One half says, “How do I get people from point A to point B in the most organized, logical and efficient fashion?” The other half says, “How can I make it fun?”

What are the skills needed, the training to be drawn upon, to prepare the two sides of the mind for this “combat”? From the right side come abilities in English, history, foreign language, art and music. From the left come the necessary accounting, math, science, geography and business skills.

English and History
A good incentive travel proposal provides a romantic, moving description of the travel experience as the guests will live it. The promotional materials also transform a piece of geography (the trip destination) into a living, breathing entity. The materials that prepare the winners for the travel experience fuel their fantasy. So you need the poetic skills of a great romantic.

Yet our writer must also have the discipline of a journalist. The proposal must deal, in almost checklist fashion, with the elements that are included in the cost. The rules of the program must be written in clear, precise, direct English. And the trip preparation materials must be quickly and easily understood.

The clearly superior incentive travel program uses the customs, the culture, the history of the travel destination to bring its uniqueness to life.

To be in a position to make that destination the foundation of a lifelong memory for the guest requires, at the very least, a good sense of history; to do it well calls for a genuine, heartfelt interest and knowledge of history.

The best travel programs inform and educate as well as host and entertain. And the incentive travel professional educates while he or she entertains.

Foreign Language
Do not mistake the intention here. An incentive travel creator need not be fluent in multiple languages to be successful. But a person who takes on the role of operating travel programs abroad can be of maximum effectiveness if he or she has a strong working knowledge of at least one foreign language.

And, most importantly, the key to fluency in any foreign language is a sound structural knowledge of English. An understanding of the nuances within a language, and the relationships of different languages to one another, yields a deeper understanding of the differences among people.

Art and Music
Music is not all rock and roll. And Leroy Neiman is not the most acclaimed painter who ever lived. The majority of guests on an incentive program are at the point in their lives where they are searching for truth and beauty. Close your eyes and picture listening to Mozart or Strauss being played in Vienna. Now, keep them closed and picture yourself soaking up all the beauty of a Renoir or a Monet in the Louvre.

The artists and composers … the poets and sculptors and writers of the world have made a more lasting impression on our lives than all the generals and politicians and statesmen. And it is up to the incentive creator to use them … to bring them to life.

I’ve referred to only five subjects that call upon the right side of the mind; by extension, philosophy, sociology, psychology and anthropology are included, as well. In short, the liberally educated man or woman “for all seasons” is best equipped to create heart-moving, mind-filling, exceptional incentive programs.

Now, to the left side of the brain.

Accounting
Could there be two people as opposite in essential nature as the poet and the accountant? Yet they must co-exist in the mind of the incentive creator. Line item costs must be budgeted, reconciliations made, the cash flow needs of suppliers, corporate sponsor and incentive creator prioritized. Foreign currency fluctuations must be dealt with. International monetary transactions are a daily task. And most important, the program must be done within budget, with a fair profit for all.

Math
We speak here not of trigo-nometry or differential calculus, but rather, of the basic arithmetic and algebraic manipulations that put one in command of numbers and, in turn, in command of problem solving.

If you’ve constructed a per-person price on a program, part of which is arrived at by amortizing $25,000 in fixed costs over 375 projected guests, what is the new price if you only have 320 guests? What formula can you fix in your mind to tell what time and what day it is in Bangkok when it’s 2 p.m. on Tuesday in Indianapolis?

These are the kinds of questions you must be able to handle without too much time, effort and anguish.

Science
Here again, not advanced chemistry or nuclear physics is required, but rather, a working knowledge of basic physical science and the human machine.

What are the effects on the human body of a 15-hour plane ride across eight time zones? What do you do with your guests the first 48 hours in Hong Kong to help them adjust to their new daily schedule? What season is it in Buenos Aires when it’s summer in New York?

If you’re not curious about the answers, then incentive travel planning is not for you. If you plan a major party the first night in Hong Kong, or if you think you’ll find the warming sun of Argentina baking you to a golden brown in July (where it has reached as low as 28 degrees F.), you’re doomed to fail.

Geography
The need for this body of know-ledge is self-evident. The consummate incentive travel expert knows the world as well as most people know their living room and knows not only the topography, the major points of visual interest and the capital, but where the water is and whether it’s drinkable or swimmable. Enough said.

Business
I’ve left the most important element for last in the hope that it will linger the longest in the reader’s mind. The most common misconception about incentive travel — and the one that does the most damage — is that we are in the business of running “trips.” We are not.
We are in the business of helping corporate marketers reach their business objectives. And to do that, the incentive creator must first understand enough about his or his client’s business — its style, product, goals — to create a program that is a sound business proposition. To survive, the incentive creator must be a pragmatic business pro.

The Challenge
Incentive travel, as the Society of Incentive Travel Executives defines it, is “a modern manage-ment tool used to achieve extra-ordinary goals by awarding participants a travel award upon their attainment of their share of the uncommon goals.” It is a basic tenet of the free enterprise system that the greater the effort, the greater the reward. The key words in the SITE definition are “extraordinary” and “uncommon.” One doesn’t earn the extraordinary for doing the common.

Quality control people are expected to control product quality. Accountants are expected to keep the books properly. And salespeople are supposed to sell, to meet set quotas.

People get paid to perform these tasks to measured standards. How, then, do we help people to overachieve, to extend themselves well beyond usual standards? The answer lies in the human psyche. We work for money, of course, but there live in each of us two human drives that, combined, explain why incentive travel works.

The first is the need for applause, the need to feel appreciated by our employers and admired by our peers.The second motivator is the desire to travel, to see strange, new places. When you take your overachievers away to a distant place for the purpose of applauding them, you have married the dual needs for self-esteem and self-actualization … and have created the most powerful, inspirational force of all.

Your company can set goals for its people well above the norm of expected performance by saying to them, “Achieve your goal and we will take you away for the travel experience of a lifetime.” This motivator is usually directed at sales personnel, but is increasingly being applied to non-sales employees to motivate them to achieve quantifiable goals such as improved productivity, quality and cost control.

You’ll note that I didn’t say that the overachievers “win” a trip. They don’t “win” anything; they earn it, through their efforts. And it’s not a “trip” they earn, but a travel experience. After all, if you ask a salesperson to work smarter or harder, or both, you can’t reward the effort with a week in the Caribbean that they see advertised in the New York Times for $499. When I say, “an extraordinary travel experience,” I mean a program so extraordinary that participants couldn’t duplicate it, no matter how much money they had to spend.

This may be a tall order, but it is the reason why incentive travel has worked to move billions of dollars of products for thousands of corporations across the country. It’s the very reason that incentive travel challenges the mind as no other profession does.

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These days we are so overloaded with information that it's easy to lose sight of the basics of running a business, and you very quickly become overwhelmed and suffer from information overload! Just take a look at some of the ebooks, products, ecourses etc. you have stored on your PC - I bet they all relate to marketing your business, getting more clients, increasing your income etc. but I bet NONE of them tell you how to manage your business!

Building a successful long-term profitable business isn't about "marketing" your business, it's about "managing" your business - the marketing comes once you have your management systems in place.

You cannot begin to market your business if you can't find the information you need, don't know who you are marketing to, and don't know where you are in your business.

So, let's go back to basics and take a look at the 3 key office systems you need to "manage" your business before you can start to "market" your business.

Filing Management System

Creating and maintaining a filing system is the very foundation that your business is built on, so this is the very first system you need to put in place - an efficient and effective filing system.

With a proper filing system in place you will very quickly and easily be able to find the information you need, when you need it.

Contact Management System

After you've got your filing system all straightened out, you then need to set about organizing your contacts. This is another crucial area of managing your business. If set up correctly your contact management system allows you to:

* Keep a note of clients, potential clients, and colleagues contact information.

* Easily and effectively follow-up with a prospect.

* Locate critical client contact information quickly and easily.

* Build your business.

Financial Management System

The is the final key office management system you need to put in place for managing your business. Once you know where you are in your business financially, you will be able to much more effectively market your business.

Having up-to-date, critical, financial information available at your fingertips allows you to efficiently manage cashflow and be able to know straightaway if you can take advantage of opportunities that come your way.

So remember, go back to basics and first "manage" your business before you "market" your business.

Online Business Manager & Virtual Assistant, Tracey Lawton, supports professional speakers, coaches, and authors to operate an efficient, organized, and profitable business. Learn how to create an efficient and organized office in 7 EASY steps, and receive free how-to articles at http://www.OfficeOrganizationSuccess.com.

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Technology is a wonderful thing - it allows us to work virtually, from anywhere in the world, and makes our lives easier. However, it can also hinder us, and this is particularly true in the case of emails.

Every day we are bombarded with hundreds of emails, only a small percentage of which are necessary. Spam filters are great at filtering most of the unwanted emails but a small amount do get through, adding to the number we have to sift through!

We can spend hours each day checking, sorting, and reading our emails only to find we haven't the time left for actual work! Here are my top 5 tips for managing your emails and giving you back your much-needed time.

1. Emails aren't urgent! Don't feel you have to read and act upon your email the second it hits your inbox. You don't! It isn't urgent. If there was a real emergency then your client/colleague/friend would call you.

2. Are all those newsletters you subscribe to really necessary? Probably not! If this the case spend some time going through them and unsubscribing the ones you don't really want or read.

3. Does your email play distracting alerts, i.e. a sound? If so, disable it. This is a distraction and you could quite easily stop what you're working on to go and check your emails. It will then take you some time to get back on track again, not to mention the amount of time you've just lost stopping what you were doing, reading your emails, and actioning them.

4. Schedule set times to check your emails. Once or twice a day is enough, say first thing in the morning and again later in the day. If you subscribe to various industry groups save reading these emails until you take a break from your work - maybe at the end of the day when you're winding down. You can easily get sidetracked reading all the different topics and replying to them, all of which is taking you away from your paid work.

5. Utilize email filtering tools. Set up folders and filters so that your email gets sent to the appropriate folder as soon as it arrives. Don't know how to do this? Read my article Is Your Inbox Getting You Down? How to Avoid Inbox Overwhelm available on my website.

If you follow these 5 tips above, you will find you are spending less time worrying about and checking your emails, and more time on being productive! That has got to be better for your bottom line.

Online Business Manager & Virtual Assistant, Tracey Lawton, supports professional speakers, coaches, and authors to operate an efficient, organized, and profitable business. Learn how to create an efficient and organized office in 7 EASY steps, and receive free how-to articles at http://www.OfficeOrganizationSuccess.com.

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This article is contributed by Heather Johnson, a freelance business, finance and economics writer.

With a tax deadline looming over their heads, many self-employed Americans are scrambling to get their ducks in a row. After all, the last thing anyone wants is to be audited. Even muttering the word strikes fear into the hearts of most people.

Why should entrepreneurs be especially concerned about audits? It is because the government is more likely to examine the self-employed a little closer. This is because many people accept cash payments, avoiding those pesky W-2 forms. As you can imagine, not everyone complies with the honor system when it comes to claiming his or her income.

So, now you know that you're more likely to be audited than someone else who isn't self-employed. Mind you, that doesn't mean the IRS is waiting in the bushes and ready to pounce. Chances are, you will never be audited and if you are, it really isn't the end of the world.

That being said, there are a few precautions you can take that will work in your favor. Below are eight tips for making you the least likely candidate for an IRS audit:

1. Be Honest – Don't purposely fudge on your taxes, even if you know someone who gets away with it or if you've done it in the past. It's wrong, it's illegal and it's really not worth it if you get caught.

2. Save Every Document – This is the most important step in good accounting and you've heard it a million times. Should the IRS ever come knocking on your door, this will be your saving grace.

3. Hire A Professional Accountant – Just as many people don't save receipts like they should, not many people heed this advice. However, it really is best to hire an accountant to handle your taxes when you are self-employed. Your paperwork is more complicated than those who work for a company.

4. Avoid Math Errors – A miscalculation that is spotted by the IRS will alert them to your records. The goal here is to keep a low profile, so any discrepancies make you stick out like a sore thumb. Mind you, a miscalculation may just result in a friendly notice from the IRS and not a full-blown audit, so don't panic.

5. Don't Forget Your Signature – What could be more conspicuous than you failing to sign your return form? Even a minor mistake like that could make the government suspicious.

6. Don't Drastically Change Your Lifestyle – If you were to move from a palatial mansion to a single-wide trailer, this might ring some alarms when you file your taxes.

7. Don't Be Successful – Heh, this may be the best rule to break. Hopefully you are successful and will become even more so, but a drastic change in income will certainly make the IRS a bit curious about your situation.

8. Be Careful With Your Deductions – Don't go crazy with deductions, particularly if you aren't sure how they work. Also, forget about deducting anything you don't have a receipt for. As far as the IRS is concerned, you didn't buy it for that reason if you don't have a receipt.

Here's some encouraging news: as of the year 2003, only 1% of Americans filing tax returns were audited. So, that leaves a 99% chance you will never have to face those scary taxmen. Also, don't assume you're going to the poor house or the big house if they do choose to audit you. As long as you are as honest and as thorough as possible, the IRS won't send you up the river.

Heather Johnson is a freelance business, finance and economics writer, as well as a regular contributor at Business Credit Cards, a site for best business credit cards and best business credit card offers. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com.

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This article is contributed by Sam Carpenter, author of the new book, 'Work the System: The Simple Mechanics of Working Less and Making More'.

Sam Carpenter never really understood the old adage, “work smarter, not harder.” Now, the multi-million dollar business owner lives by it.

Eight years ago, Sam was working ridiculously long hours for meager pay, crumbling under stress, and had zero time for himself or his family. The president and CEO of Centratel, a struggling telephone answering service business, Sam might as well have been working a per-hour job. For 15 years, he put in 80- to 100-hour workweeks, simply trying to keep his business afloat. His body was a wreck from the stress, and his doctor, convinced he was depressed, prescribed him Prozac and then Ritalin. On top of all this, he was a single parent of two children for this entire decade and a half.

Five days before he was going to miss a payroll for the first time and ultimately lose his business, Sam had a breakthrough epiphany. He realized that his life and business problems did not require “holistic” solutions. He saw that the primary systems in his life and business are made up of linear “sub-systems” that can be isolated and then perfected one at a time. By perfecting sub-systems, the primary systems would, in turn, function flawlessly. So, at once, he grabbed hold of the reins on his business, health, and relationships. He extracted and optimized each sub-system, then reinserted each back into the mix. Improvement was dramatic on all fronts.

Now, the author of Work the System: The Simple Mechanics of Working Less and Making More, Sam works two hours a week, runs a multi-million dollar telecommunications company once on the brink of folding, and makes more in a month than he used to make in a year. He is of robust health – climbing, cycling and skiing again. He owns a second home and travels, and recently remarried. On top of that, he also founded and operates an international non-profit organization to aid third world schoolchildren, and is in the process of launching a major internet startup site with his wife, Linda.

Follow Sam’s six steps to “working less and making more,” and watch your own business or corporate management position become more efficient, your workweek lessen, and your income skyrocket. Also, watch your personal life become more efficient and rewarding:

1. Change your fundamental perspective of the mechanics of the world. Take a position “outside and slightly above” your job and your life. See that everything is composed of linear systems and that these systems can be improved, one-by-one. Understand that by perfecting a primary system’s sub-systems, the primary system will in turn be perfected.

2. Know there is a universal propensity for order and efficiency: 99.9% of everything works just fine. Life wants things to work out; you just have to “climb on board.” There’s probably not much that requires repair.

3. Stop playing Whac-a-Mole. End the fire-killing. Instead of repairing problems as they arise, dig down deep, identify the inefficiencies, fix the dysfunctional systems that cause them, and prevent the problems from re-occurring. Climb down into the mole-holes and eliminate those critters altogether.

4. Create simple documentation. It has to happen. Boring, but true: the existence of documented protocols is the single greatest difference between large successful businesses and small struggling businesses. Create a strategic objective, operating principles, and working procedures for your job or your business. It won’t take long and the return will be a thousand-fold.

5. Make sure you’re in a position of advancement. If you look upward and there’s no rung on the ladder for you to reach, consider switching jobs. Or, find a small business that’s struggling, buy it, and fix it. To attain freedom, you must be in a position where upward mobility and hands-on management are possible.

6. Hire people who “get it.” You must surround yourself with people who agree with your philosophy and methodology. If your employees aren’t on the same page, don’t expect to get the results you want.

Sam Carpenter, author and speaker, is president and CEO of Centratel, an elite quality telephone answering service, and author of the new book, Work the System: The Simple Mechanics of Working Less and Making More. Success in life, business, and relationships can be yours, too. Sam's approach is not mystical or esoteric; it’s simple, mechanical, and attainable. Visit http://www.workthesystem.com to purchase your copy of Work the System.

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Business Managers not focused on improvement become administrators at best and bureaucrats at worst.

We tend to think of Sales as being the only competitive area of business, but that’s only the beginning; competition continues beyond Sales through the entire business process.

Improvement Equals Profit Enhancement

There are 4 basic ways to improve the bottom line:

1. Cook the books.

Long before the guys at Enron there was another Texan who bamboozled for profit. Billie Sol Estes made the cover of Time Magazine in the early 1960s as the "Texas Wiz Kid". An inquisitive child, Billie Sol grew to be an inquisitive man; he figured out that liquid fertilizer was lighter than water and was worth a whole lot more. Huge storage tanks filled with water, except for the top 2 or 3 inches of liquid fertilizer, provided the security for loan after loan. He also once borrowed money on his neighbor's cattle.

Billie Sol built a financial empire on one shady deal after another. He had all the politicians in his pocket, including LBJ. There’s a down side to "cooking the books", you may end up with a room mate named Burno who insists you wear a little apron. . . Don’t do it!

2. Raise Prices.

An increase in prices should increase profitability; unless you end up being noncompetitive and lose customers. Raising prices works best when you’re a sole source provider or when you have more business than you can handle. Remember the 90s?

Better still is raising prices when the quality of the product / service and business processes is higher / better than anyone elses. It’s the customers’ total cost of doing business, not price that keeps them buying. "Buying cheap to save money can be like stopping a clock to save time."

3. Sell More.

If you sell more and control the costs of those sales you’ll make more money. The most profitable sales are most often the repeat sales to the same customers. Customer retention and repeat sales are tied to more than price.

4. Decrease Costs.

Any reduction in cost of doing business without loss of income will have a dramatic impact on profitability. Improved productivity rules.

Ronald Coase and Friction in Business

An English economist, Coase wrote that there is friction or costs involved with business entities. There’s the friction/cost of "searching" for customers and suppliers. There’s the "coordination friction/cost" of on-going business processes. The last and most expensive friction/cost, is that of "failure", of something going wrong and having to be redone. The CEO of a chain of white table linen restaurants estimated that for every meal sent back, 32 new meals had to be sold to make up the loss.

Smart customers understand about the "total cost" of doing business. Your competitor’s prices may be lower, the quality of their product/service may be equal to yours; but if their business processes are screwy and drive up the customer’s cost. . . you have no competitors. You don't have to be twice as good as the next guy, be just a little better and you stand heads and shoulders above competitors.

Fewer Doing More

Unemployment is up, and so is productivity. Those companies that constantly work on improving the quality of their product/services and of their business processes will be the survivors. The future holds more of the same.

Document Knowledge / Expectations

All human endeavor is predicated on knowledge, on what you know. Business knowledge is more than facts or data; it’s the "orderly collection of information needed to get things done."

The verbal communication of policies (goal driven guidelines) and procedures (steps needed to achieve goals) expands on training time and creates errors. Word of mouth business operations are like a sailor’s promises while on shore leave, they’re not worth the paper they’re not written on.

Every manager’s job description should start with a commitment to improvement; "Focus on improvement, on how things can be done better for the same costs or less." If people aren’t told in black and white what’s expected of them, they get busy and forget.

Track the source of screw ups and reward customers / employees / vendors who tell you of a failing, of an opportunity for improvement.

Write down the goal(s) of each business function and then ask the experts, the employees, how the goal(s) can best be reached. Write down the steps necessary and ask new employees for new knowledge; how they’d do things differently.

In Closing

Don’t worry about industry averages when gauging the KPIs for different business areas; it’s much more important to focus on improvement, on how things can be done better. It takes a lot less effort to keep an old customer satisfied than to get a new customer interested.

And remember, "the bitterness of poor quality lingers long after the sweetness of cheap price is forgotten."

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

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Every business operates on knowledge and yet many companies never organize and document that knowledge into useable P&P.

As a result of this failure to organize and document the knowledge it takes to operate a business, many companies operate on a word of mouth basis.

"The new guy learns from the old guy who learned from the dead guy."
Scott Stratman

Business Friction/Costs

Ronald Coase, of "Coase's Law", says that there is friction involved with being in business. The original friction or cost is that that goes with finding customers for a company's products/services, and of finding vendors/suppliers who can take care of the company's needs.

Beyond "acquisition" costs there's the ongoing friction of doing business; transactional costs.

The most expensive cost/friction is that of failure. Regardless of the "industry", the most expensive work done in a business is the "re-do".

As Right as Possible, the First Time

Some companies just don't seem to understand or care that when something goes wrong it drives up their cost of doing business, and it also drives up "cost of doing business" for their customers and vendors. Its like they really think that they don't have time to do things right the first time. Baloney.

A major source of errors, omissions, miscommunications and screw ups is the lack of written P&P, of operating on a "word of mouth basis". The cost? A $30 mistake can take $300 in time and effort to correct, and if that company is doing a 5% PTP (pre tax profit) it takes ( 20X$300) $6000 in sales to cover the cost of failure. And if a customer is involved there's no way of knowing the impact/cost of the mistake on/to that customer. And there's no way of knowing who that customer might have told about the failure. What's the cost in lost business from "negative word of mouth advertising"?

" The true cost of errors is unknown and unknowable." Edwards Deming

The 5 Organizational Ps

Every company needs a plan, a strategy that drives it's actions. The plan may be to increase market share, to reduce costs, retain existing customers, provide new products/services to old customers or it may be to have the "lowest price, always". Wait a minute that plan is already taken.

Based on the "plan", every business function must have a "Purpose" that compliments the "plan" and which answers the question, "Why incur the costs that go with this business function?". For example, distributors incur the costs of having a warehouse so that they can meet or exceed customer expectations, so that they have an acceptable "fill rate". A distributor doesn't have to have 100% of what customers want 100% of the time, but if they don't have an acceptable "fill rate" the customers will go elsewhere. Purpose is the first of the 5 Ps.

Once the "Purpose" is established`, every business function can be broken down into it's major components. In our warehouse example those major components might be "receiving", "shipping", "truck maintenance " and "inventory control". The goal for each major component is the basis for "policies', for goal driven guidelines. Policies are the second of the 5Ps.

There are 6B people on the world and there are 6B versions of reality. The third of the 5Ps is "Procedures", and one size does not fit all. Purpose and Policies are determined by managers who, if they're smart, let the experts (the guys doing the job) tell them how the goals established will be accomplished.

The fourth of the 5 Ps is "People". Based on the steps needed to achieve established goals hire the right people for the job.

The fifth and most important of the 5Ps is "Process Monitoring/Performance Measurements". The key steps in the "procedures" need to be monitored to ensure things aren't falling through cracks, that the process is on track.

In life and in business things will happen for which we haven't planned. In 1969 I was living in Denver and I was going to drive out to S.F.. My plan was simple enough, I'd drive north to Cheyenne, Wyo. and turn left. Outside of Boulder, Colorado there was a "hippie" and his girlfriend holding up a sign saying "SF", I picked them up. They had a large bag of soy nuts and of this other stuff which they shared; we missed our turn. Montana was nice and we eventually got to S.F.. It was a trip.

Performance must be measured against goals. If the goals are well thought out and achievable but are not being met its one of two things; either the procedures are wrong or you have the wrong people for the job.

"Employees respect what managers inspect , not what they expect." Don Rice Tex A&M

It doesn't matter what you ask for, its what you monitor and measure for that tells employees what you really want from them.

BestBizWays; Powerful in Effect with Little Waste of Effort

Document the knowledge needed to run a business and you'll do a better job of hiring the right people, you'll reduce training time with new employees, errors will be minimized, customer service levels will rise and the bottom line will go up.

Organize and document the knowledge needed to operate a company and you increase it's value by having a "cookbook".

In Closing
Harvest new knowledge by asking new employees to tell you how things can be done better. Do this in the first two weeks on the job, before a new employee starts thinking like everyone else. P&P are never done, things are always changing. P&P should have a cover sheet that says "Under Construction". The best information in the world is worthless until you put it to work. Its up to you.

The 5 Organizational Ps

Purpose: Every business function must have a clearly stated purpose which compliments the "Plan" and answers the question, "Why incur the cost ?".

Policies: Goal driven guidelines for each of the major components within the function.

Procedures: The steps needed to be taken in order to accomplish established goals.

People Requirements: Based on the procedures hire the right people for the job.

Process Monitoring/Performance Measurements: Track key steps in the process and measure against the goals.

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

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Scientists believe that about 150,000 years ago a huge volcanic eruption created a cloud of ash that covered most of the Earth for 6 years. Not all sunlight was blocked but enough so that most plants and animals died.

Those life forms that survived "the long winter" were the smart and the strong. Those life forms that perished were the weak and those who couldn't adapt to the change. It's kind of that way in business.

We are in an economic downturn and a culling of the herd is taking place.

Never Time Enough

Errors, glitches, screw ups, misunderstandings, omissions, the left hand not knowing that the right hand exists much less knowing what it's doing; all drive up the total cost of doing business. Vendors, sellers and customers all pay for inefficiency.

Too often the unofficial motto of some companies seems to be "we never have time to do things right, the first time." A "redo" is the most expensive and unprofitable work that a business does. Some businesses make money in spite of themselves.

By documenting the knowledge it takes to get things done right the first time, their best biz ways, companies can improve their efficiency and better prepare themselves to deal with reduced sales, slow cash flow, thinner margins and major business disruptions. Moving from "word of mouth" operations to written policies and procedures promotes efficiency of action.

The Closet Report and Dead Customers

You've most probably have encountered inefficiencies that have left you scratching your head and wondering what the heck is going on.

Steve Epner of BSW Consulting, Inc. tells a story about a report that clearly illustrates wasted time and effort. It seems that a woman in a company spent the last 2 hours of each day compiling some data into a report. She'd leave it on the corner of her desk and the next morning it would be gone.

When asked what the report was for and who it went to, she didn't know. The woman had been trained by her predecessor to do the report but was never told why or to whom it went.

It turned out that about 3 years before the CEO had asked that the report be generated and left for him to pick up at the end of each day. After a while he decided he didn't need it and he quit picking it up, but forgot to tell the preparer.

As the reports piled up the janitor took note that they were unsightly and got in the way of his cleaning. He started moving the report to a nice safe out of the way closet. He referred to it as the "closet report." When the stack in the closet got too high, he'd toss them out and start a new stack.

My friend Russ Case use to tell a true real story about a hospital room in England where the patients unexpectedly kept dying. All the equipment was checked and double checked, the air was tested, the water and food were checked out and found to be safe. The deaths continued and the toll hit 10 before the cause was found. Again, it was the janitor.

It seems that this room has a shortage of electrical outlets and when the clean up crew came in they'd unplug the life support equipment so that they could plug in their cleaning equipment. To protect their hearing the cleaning guys wore ear muffs and couldn't hear the patients' death struggles.

Profit and Survival Enhancement

The former head of the Federal Reserve, Alan Greenspan, issued a warning in March 2007 that the world's largest economy could be heading for recession.

U.S. consumers have helped keep the world economy afloat in recent years by borrowing against the rising value of their houses to finance spending. Now, hit by higher gasoline/energy/transportation prices, a crumbling housing market and an increase in worldwide demand for more credit..the economy has soured.

During an economic downturn the demand for goods and services drop off and a number of businesses, most especially those already struggling, fail.

Just in case Greenspan is right, here are some thoughts on how businesses can position themselves to better survive an economic downturn.

Companies run on money, fail to pay the phone company, the IRS, the power company, employees and suppliers and you are out of business. So now, before you have the need is the time to secure long term financing. Don't delay, sit down now with your lender and work out a line of credit that you can draw on as needed. The time to borrow is when you don't need it because when you do need it you may find you can't get it.

If you already don't know, you need to identify and embrace your core customers. Think of the 80/20 rule. Do 20% of your customers make up 80% of your business, if so you best know those customers, their needs and desires and the names of their kids.

You also need to know how any downturn in business would effect them, they may be your buddies now but if they fail you don't want them taking you down with them. Run credit reports on core customers on a regular basis to help you remain confident of their ability to pay...and to possibly increase their credit line, if they need and can handle an increase.

Invest now in finding new customers.

Don't allow your salespeople to become order takers who service existing customers and forget how to sell. The sharpest tool becomes dull from misuse or nonuse.

Putting all your eggs in one or a few baskets may be efficient and profitable during good times but can come back to haunt you during an economic downturn.

Even during good times it's important that your people be under a little stress so that they don't become lazy or indifferent toward their work. And hearing that some guy got the sack for not showing up or failing to work hard keeps the other employees on their toes.

Weed out weak employees and cross train the strong including senior managers. This is always a good idea but becomes critical when business slows.

Combine Overlapping Business Functions

In theory customer service is the customers' champion, the guys who care and who make things right. However, in practice and most especially in regard to consumer customer service, customer and service is an oxymoron. It's as if the "mad hatter" was in charge. Mumbo jumbo and then more mumbo. B2B customer service tends to be better because of competition for the same limited customer base and the larger sums of money involved.

In the course of dealing with why customers have not paid according to terms, the credit area deals with many different segments of the business chain, both internally as well as outside the company. Credit is kind of like being the guys with shovels following the parade.

Consider combining customer service with credit for improved efficiencies and communications.

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

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Businesses want the different departments within their organization to cooperate, to compliment each other's efforts. No business function is an island onto itself and when any business function's purpose is misunderstood it adversely effects the entire operation. Cooperation creates synergy and improved profitability. Credit and past due A/R management is often a missing link in the profit chain.

Credit and Sales

The job of Sales is to turn prospects into profitable customers. Good Sales People ask questions to determine a prospective customer's need or desire. They then make a presentation on how their product/service will meet or exceed the need. If a customer then wishes to buy the method of payment must be determined. Should the customer want to pay at some later date, i.e. via credit terms the profit chain starts to fray.

Sales people are trained and paid to sell, Credit people are not!

It's not that Credit people fail to understand that without sales there is no business; but it's how the Credit function's performance is measured that creates conflict. Management can talk about the importance of credit approval to sales until they're blue in the face; but if they then turn around and measure DSO (days sales outstanding) and % bad debt, the message sent is that the number one job of the credit area is "risk management."

"Employees respect what management inspects and not what it expects" - Dr. Don Rice Texas A&M

If DSO and % bad debt are stressed, the results will be a harsher qualifying of prospects and a lower approval rate, and the placing of more past due customers on credit hold. A better and more profitable relationship between the Credit and Sales areas must be built on performance measurements that encourage finding ways to say yes to profitable sales, and that focus on keeping customers current and buying.

The Credit area can play a constructive role in supporting the Customer Service, Operations,
Accounting/Finance and Marketing functions, but its highest calling is to new and repeat sales.

Credit and Customer Service

Helping customers so as to retain their goodwill and continuing business is the job of every business function that has contact with customers.

In many companies the largest percentage of past due customers haven't paid because of unidentified and unresolved problems. The problem may be with the customer, or with the vendor, or the result of the actions of a 3rd party. The early identification and resolution of systems problems by the credit area will raise both customer service and customer retention levels.

"Anything that can go wrong will go wrong" - Murphy's Law "Murphy was an optimist" - WalkingBear

Credit and Operations

Seamless and smooth running business processes is a worthy goal. In the course of fixing things that have gone wrong, so that past due customers pay, the Credit function will uncover "areas of opportunity for improvement" throughout the entire business chain.

The Credit area can and should play an important role in constantly improving on the quality of a company's business processes. Quality is a must and constant improvement of a business' processes is like earning compound interest.

"A business manager not focused on improvement becomes an administrator at best and a bureaucrat at worst." - WalkingBear

Credit and Accounting/Finance

Safeguarding the assets of a company and ensuring sufficient liquidity are major roles of the accounting and finance area of business. In many companies the A/R is one of if not the largest assets and next to cash on hand A/R is the most liquid asset. The Credit area's role in creating and managing the A/R places it in an ideal position to ensure positive cashflow, quality receivables and the early identification and control of bad debt losses.

A key player in a company's financial well being, the credit area compliments the efforts of the accounting and finance area.

Credit and Marketing

Marketing is about more than getting prospects to call, it's also about communicating with customers so as to influence them in a positive way. A credit function not attuned to a company's marketing mix, the interrelated and interdependent activities in which the company engages in to meet is objectives, will cause the business to suffer.

Credit's central role and its need and ability to interface with prospects, customers, sales, accounting and finance, vendors, operations etc. place it in a prime position to further and to monitor a company's marketing efforts.

In Closing

I really enjoyed being a Corporate Credit Manager; it was like being a spider in the middle of a web. I had tentacles that reached everywhere. Once our CEO and the rest of the management team came to understand the true potential of the credit area; of its ability to increase sales (new and repeat), effect cashflow, identify areas of opportunity for improvement, and to support the marketing objectives…we changed the name of the department from credit and collections to the Customer/Sales Support Department. Along with the name change and new expectations came new performance measurements and a bonus based on improving profitability.

Abe WalkingBear Sanchez is an International Speaker / Trainer / Consultant on the subject of cash flow / sales enhancement and business knowledge organization and use. Founder and President of www.armg-usa.com, WalkingBear has authored hundreds of business articles, has worked with numerous companies in a wide range of industries since 1982 and has spoken at many venues including the Shakespeare Globe Theater in London.

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If you’re new to the world of merchant accounts, then you probably have a lot of questions. Here are 18 common questions and their answers – enough to get your business well on its way to accepting credit cards online or offline.

Q. What is a merchant account?

A. A merchant account, sometimes referred to as credit card processing or payment processing, lets businesses accept payments through credit cards, debit cards, and gift cards. To begin accepting credit cards, a business must work with a merchant account provider aligned with an acquiring bank to apply for a merchant account. That merchant account belongs solely to your business and you are responsible for it in every way. Your merchant account is subject to all the rules established by Visa and MasterCard (and possibly with American Express and Discover).

Q. What is a third-party provider?

A. Third-party providers, also known as third-party payment processors, are similar to merchant accounts in that they allow your business to accept credit card payments. However, you do not need to apply to a bank. Instead, you apply to the third-party provider and the bank never sees your application. It is often easier to get a merchant account through a third-party provider, because some banks view ecommerce businesses as high-risk ventures. The merchant account that you use is operated by the third-party-provider and shared among multiple businesses. Unlike establishing merchant accounts, opening an account with a third-party provider requires no application process or underwriting evaluation.

Q. What are the fundamental differences between a merchant account and third party provider?

A. To obtain a merchant account, your business must apply directly to the bank. Applying through a third-party provider omits the need to work directly with the bank. As stated above, it may be easier to apply through the third-party provider because banks view many ecommerce businesses, especially new ones, as high-risk ventures. However, when you work with a third-party provider, your business must follow all of that provider’s rules and pay its fees. In contrast, if your business has its own merchant account, it is directly subject to the rules established by Visa and MasterCard (and possibly Amex and Discover, if you choose to accept those payments). Therefore, if your business is able to get its own merchant account directly from the bank, in most circumstances this is the preferred solution for accepting credit card payments.

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Q. What kind of costs do merchant accounts carry?

A. Costs associated with merchant accounts can be grouped into two categories: setup costs and ongoing costs. Setup fees include the fee for the initial application, the setup/installation fee, the costs of necessary hardware and software, and, on rare occasions, a security deposit or a minimum reserve amount that must be maintained in the account. Ongoing fees include the discount rate and per-transaction fee, daily batch fee, authorization/verification charges, voice/touch tone authorization fees, and chargeback fees. Additional ongoing costs may include annual renewal fees, fraud protection program fees, monthly gateway fees, monthly statement fees, and monthly minimum fees. The actual types and amounts of costs vary among merchant accounts, so be sure to request a complete list of all fees before signing up for any particular merchant account. Our free ebook defines all the relevant fees associated with a merchant account.

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Q. Do American Express and Discover charge these same fees?

A. The fees described above are applicable only for Visa and MasterCard. For American Express and Discover, the merchant account provider controls only the transaction rates. All other rates are controlled by those companies themselves. Amex offers two different pricing plans, depending on your charge volume. Discover, on the other hand, has a percentage-processing fee that varies by organization, but is usually between 2.50% and 3.25%. Also, there is no sign-up fee for Discover.

Q. How can I process American Express and/or Discover credit cards?

A. If you wish to accept another type of credit card, simply notify your merchant account provider. In most cases, the provider can apply to Amex, Discover, and other companies on your behalf.

Q. What options do I have for accepting credit cards?

A. You can accept credit cards in many different ways. If you have a retail storefront, you can accept credit cards on site with a physical terminal, or you can use a virtual terminal to enter customers’ credit card information via the Web. A service known as Dial Pay allows you to call a number and enter customers’ credit card information through your telephone keypad. You can also accept credit card payments through mobile or wireless devices, or through your company’s website.

Q. What do I need in order to accept credit cards online?

A. You will need four things to accept credit cards online: an online shopping cart, a payment gateway service, a credit card processor and an authorized Internet merchant account. The online shopping cart allows customers to make their purchase selections and then check out, providing their credit card information for payment. The online shopping cart sends the information to a payment gateway service (a secure certificate must be employed), which acts as an intermediary mechanism between your website’s shopping cart and the banking networks. Once the customer’s card-issuing bank verifies adequate funds and reports this information to the merchant account provider’s acquiring bank, a notice of approval is sent back to the payment gateway system which, in turn, sends the notice to the shopping cart for display to the customer. The credit card processor then deposits the funds (minus any associated fees) into the merchant’s bank account. The final piece, the Internet merchant account, is available to the merchant when the credit card processing company approves his/her application and authorizes the merchant to accept credit cards.

Q. How can I reduce online credit card fraud?

A. The key to reducing online credit card fraud is to communicate with your customers and be sure to get their authorization for all transactions in writing, whether via mail or email. You should also always verify the 3- or 4-digit security code (also known as CVV2) on the back of the credit card. (On American Express cards, the code is located on the front.) Because it is not encoded in the card’s magnetic strip, it is a reliable way to verify that the purchaser has the credit card in his or her physical possession during an online or telephone transaction. An Address Verification System (AVS) check should also be employed, comparing the customer’s billing address with the address indicated on the magnetic strip of the credit card. If there is an AVS mismatch, the transaction may be interpreted as a higher risk.

Q. How can I accept credit cards if I don’t have a website?

A. If your business doesn’t have a website, you’ll need to use a physical or virtual terminal to process credit card payments. A physical terminal lets you swipe the customer’s credit card on site. A virtual terminal lets you enter credit card information via the Internet. If you need to process only intermittent charges, Dial Pay (using the phone to input your customers’ credit card information) is probably your best option because of its associated lower monthly fees.

Q. What tiered rates do credit card processors apply to merchant accounts?

A. Traditional credit card processors use a three-tiered pricing scheme for their retail merchant programs: (1) the qualified rate, which is the best rate available; (2) the mid-qualified rate, for transactions that are keyed in; and (3) the non-qualified rate, for all other transactions. Some merchant account providers also discount their fees for check cards, creating another tier. Internet-only merchant accounts are usually limited to only two tiers: (1) the qualified rate, which is equivalent to a retailer’s mid-qualified rate; and (2) the non-qualified rate. Hence, online-only businesses generally pay more for their credit card transactions than do their bricks-and-mortar counterparts.

Q. What is Interchange Cost Pricing?

A. Interchange Cost Pricing is a pricing scheme for credit card processing that, for most businesses, is significantly less expensive than traditional pricing schemes. With