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Cash flow is vital for any business. If you don’t have enough cash coming into your business, you could find yourself unable to pay suppliers, or, more importantly, short of the financial resources necessary to invest back into the business and expand. Protect your cash flow by using these three ways to speed up cash collections. 1. Optimize Your Billing Policy Every business needs a formal policy for billing and collections. Set up a formal billing system in your organization that ensures bills are sent out on time. Use a standard format for your bills that encourages people to pay on time and in full. Make sure every bill contains all the details the customer needs to make the payment, as well as a deadline for payment. 2. Monitor Your Receivables It’s vital for any business to know how much cash is coming in on a daily or weekly basis. Put a system in place that keeps track of payments received, as well as tracking which bills are still outstanding. By tracking your cash collections in this way, you can identify which accounts are causing the biggest problems with cash flow in your organization, which means that you can then focus your efforts on those collections. 3. Follow Up Unpaid Invoices When customers don’t pay their bills on time, you need to follow up with them. Begin by sending a friendly reminder that the bill is still due, along with details of how the customer can make the payment. In many cases, this reminder will do the trick, but with some customers, you will need to take a tougher approach. Consider imposing late payment penalties on customers who miss payment deadlines to compensate for the damage that disrupted cash flow can do to your business. Alternatively, you could try offering a small discount for customers who pay within a few days of the invoice. This positive approach encourages customers to deal with invoices as soon as they receive them. Conclusion Cash flow is the lifeblood of any business, so don’t let yours dry up. Follow these tips to speed up cash collections and cut down on the number of bills that go unpaid. Sources http://quickbooks.intuit.com/r/financial-management/five-ways-to-speed-up-your-cash-flow

The IRS audits a small percentage of business tax returns each year. Tax audits take up time and resources, and most small business owners would prefer to spend their time making money. As a result of exhaustive research, we’ve identified these five tips to help you minimize the risk of a tax audit. 1. File Returns on Time It’s true that the IRS has rules governing what happens when you file a return late, and while the initial penalty might not seem that bad, late filing is a trigger. If you routinely file late returns, you’re going to increase the chance you’ll be audited. To avoid temptation, prepare accurate records in a timely manner. If you don’t have the time or skills background to do the accounting yourself, it’s worth hiring someone to do it for you. The best way to ensure that you file on time is to make preparing returns extremely quick and easy to do. 2. Be Cautious About Rounding It’s perfectly acceptable to round up to the nearest whole dollar, but that’s as far as you can go. If you paid yourself a salary of $60,005.32, make sure to report the number as $60,005. If you round to an even $60,000, the IRS may be knocking on your door. 3. Manage Independent Contractors Carefully The IRS is very clear and detailed in their definition of when a worker is considered to be an independent contractor. If you have independent contractors in relation to employees, that could trigger an audit. If you aren’t sure of a worker’s status, get advice from a tax attorney or CPA. You can also file a Form SS-8 with the IRS to get an official ruling. 4. Be Prepared When Claiming Vehicles for Business Use If you claim 100 percent business use of a vehicle, and you don’t have another vehicle for personal use, you’ll need very detailed records. Track the mileage and purpose for each trip that will document the business purpose of all the miles driven each year. 5. Don’t Pay Unreasonably High Salaries Some individuals have been known to pay shareholders who work in the business a very high salary specifically to reduce the company’s tax burden. Avoid any potential issues by ensuring that the salaries paid to shareholders are in line with industry standards. Even if you’re doing everything right, it’s always possible that you’ll be audited someday. Develop a mindset that anticipates the worst. Be rigorous in keeping detailed documentation as if you were going to be audited on an annual basis. You’ll be glad you did if the IRS does call. Sources https://www.americanexpress.com/us/small-business/openforum/articles/7-audit-red-flags-small-businesses-need-to-avoid/http://quickbooks.intuit.com/r/taxes/8-common-tax-audit-triggershttps://www.legalzoom.com/articles/how-to-avoid-a-tax-audit-7-tips-for-small-business-owners

All business owners should be curious of how much their enterprise is worth, and not just when they are getting ready to sell. Understanding the true value of a business is crucial for every day operations and can set a business up for success. Here are the top four reasons for placing an accurate value on your business: Financial Planning A reliable and accurate valuation of a company can help a business owner better manage their business and personal funds. Wealth managers, accountants, investment advisors, estate planners and other finance-related professionals will then have a precise picture of the business’s financial outlook and can provide more knowledgeable counsel for a prosperous financial future. Insuring the Company A business’s valuation is also very important to securing proper business insurance coverage, e, which, interestingly, is integral to maintaining the value of the company. Without an accurate business valuation report, a business could wind up being over- or under-insured. This is not only bad for the bottom line, but it can skew financials and affect the value of the business when it is being prepared for sale. . For instance, a business owner may find that being over-insured has tied up money that could have otherwise been put toward paying down liabilities. Those funds could also have been reinvested into the business to promote growth, instead they are unavailable which inhibits the overall value of the company. Raising Capital Having an accurate valuation report makes it easier to raise funding. Potential investors love details, and a concrete value associated with a business can help demonstrate how far that business has come, and how new funding will help it grow. Selling the Business The value of the company is arguably the most important aspect of the sale of a business. It’s the basis of negotiations, and often serves as a representation of years of hard work and success. Knowing how much a business is worth before you put it up for sale can help a business owner ensure that they’re fully and fairly compensated. Which Values Do I Need to Know? So, now that the ground work has been laid on why business valuations are important for every business owner. It is important to understand the different definitions of value and what each of them means to the business. Enterprise Value - The enterprise value is similar to a balance sheet. It is calculated by adding together the company’s debts and the total market capitalization, and then subtracting cash holdings. It’s used as a quick way to determine value. Equity Value -The equity value describes how much the company is worth to shareholders. It’s calculated by adding the company’s cash holdings to the enterprise value, as well stock options, securities, and other potential-creating investments and assets. Examining the equity value of a company is good for getting an idea of both its current and future values. Asset Sale Value -This value only takes into account the value of the company’s assets. This includes inventory, fixed assets such as paid-off real estate, equipment and vehicles, as well as intangible assets such as equity. The asset value does not include cash or liabilities. Liquidation Value -This is how much a business owner would get if they sold off all of the company’s assets. While it does include cash and other liquid funds, it does not include intangible assets. The liquidation value is most often used for bankruptcy cases, or when the company is otherwise in trouble and looking for a quick sale. Key Performance Indicators -While not entirely financial, this final type of valuation tells business owners how effective the company is at meeting its objectives. Business owners can use these benchmarks to compare their operations to other companies across their industry, allowing them to determine specific strategies for success. Key performance indicators directly correlate with the value of the company, as meeting the business owner’s specific goals is integral to growth and profit. By understanding the value of the business, business owners can position themselves for success in the near term and the future. Experian provides comprehensive reports that include multiple valuation methods and estimates you can rely on. See a sample report. Related article: Tips for Buying or Selling a Business - Richard Goeldner, Small Business Matters Podcast

Understanding the ins and outs of financial management is important for every consumer. Being educated on managing their credit, understanding the impact of a credit score, or grasping simple bookkeeping can be intimidating without the proper training. When it comes to business owners, it is even more important, because improper management of their finances can be detrimental to their bottom line. However, with current regulations in place, it makes it difficult for consumers and small business owners to know where to turn to seek out advice without having to pay a steep price for assistance. Currently, Congress is reviewing legislation that would remove some of these challenges to further the development and delivery of personalized credit education. While the legislation would have an obvious benefit for consumers, it could also help improve the financial standing of entrepreneurs and small businesses owners. The fact is that many business lenders often rely on the commercial credit of the enterprise and the personal credit of the business owner when extending lines of credit. This is especially true for sole proprietorships and partnerships. Small business owners want, and need access to personalized credit education It’s estimated that more than 120 million credit score disclosures (key factors that may adversely affect a consumer’s credit score) are delivered to consumers each year when they apply for a mortgage, are denied for credit or are offered less than favorable terms on a loan. The number of score disclosures is likely to increase with the growing number of lenders providing credit scores to consumers on their monthly billing statements. Transparency of credit scores is a good thing, but a score disclosure simply cannot help consumers answer the question, “How can I improve my credit score?” For this advice, they often turn to the credit bureaus that generate the score. However, credit bureaus are only permitted to provide general information regarding a consumer’s score. They are unable to provide personalized steps to help consumers understand what they need to do to improve their score. This is primarily due to a little known federal law — the Credit Repair Organizations Act (CROA) — being misinterpreted. CROA stands in the way While CROA has been effective at shutting down credit clinic scams, it has recently been misapplied by the courts in a way that has had a negative effect on innovation and competition in the credit education marketplace. For example, CROA requires consumers to wait at least three days before they can receive the requested services. In today’s interconnected world, requiring small business owners, let alone a consumer to wait three days for timely and personalized credit education simply doesn’t work. A recent joint study from the Policy and Economic Research Council (PERC) and Take Charge America Institute (TCAI) at the University of Arizona, entitled “Is CROA Choking Credit Report Literacy?” sheds new light on the barriers that consumers and small business owners face when accessing the innovative tools that provide individualized credit education to help improve their credit score. The study finds that even after accounting for different price points, including free access, CROA’s requirements may be deterring the people who need such services from taking advantage. Even when it was free, just 31 percent of consumers hit the registration page after exposure to disclaimers on the landing page, and just 6 percent completed the process after the three-business day mandatory wait. Furthermore, 46 percent of consumers indicated that they would have used the credit education product for free if they could do so without having to wait three days. Reform holds potential for small business owners, especially women and minority-owned businesses Changing this law to enable the CFPB-supervised credit bureaus— those best positioned to help consumers in this area — to provide credit advice would have tangible benefits for consumers and small business owners alike. The PERC/TAIC report found that innovative credit education can lead directly to positive financial behaviors. Of those that successfully completed the personalized credit education service experienced positive material impacts (moving to a better risk tier) at nearly twice the rate of those receiving educational materials only. Reform can also be vital to helping women and minority-owned small businesses get on level footing as small businesses owned by men. A recent analysis released by Experian found that a gender gap exists in both commercial and consumer credit files: The average commercial credit score for a woman-owned business is 34, while the average score for a male-owned business is 35; The average consumer credit score for women business owners is 689, compared to 699 for male business owners; More than 22 percent of male-owned businesses have at least one open commercial trade line, while the same can be said for only 18.5 percent of women-owned businesses; In the last 24 months, female business owners had an average of 1.3 personal accounts become 90-plus days past due, while male business owners had an average of 0.9 go delinquent. It is possible that the lack of parity in access to credit has had a direct and quantifiable impact on the bottom lines for women-owned businesses. For example, Experian’s analysis found that more than 24 percent of male-owned businesses have sales that exceeded $500,000, while only 14.5 percent of women-owned businesses see sales of that size. In addition, 21.2 percent of male business owners have a personal income of $125,000 or greater, compared to just 17.4 percent of women business owners. Similarly, in a July 2014 report entitled “21st Century Barriers to Women’s Entrepreneurship,” former-Senate Small Business Committee Chair Maria Cantwell (D-Wash.) found i that $1 of every $23 in conventional small business loans goes to a woman-owned business. While improving access to innovative credit education is not a cure all, small business owners still need to develop solid business plans. However, personalized credit education could go a long way towards helping entrepreneurs improve their personal credit standing so they can access the affordable rates and terms needed for operating capital or a startup loan. Congress must pass legislation to remove regulatory barriers standing in the way of innovative credit education To help remedy the situation, Congress should pass H.R. 347, the Facilitating Access to Credit Act of 2014. The bipartisan legislation introduced by Reps. Ed Royce, R-Calif., and Ruben Hinojosa, D-Texas, would exempt reputable nationwide Consumer Financial Protection Bureau –supervised and examined credit bureaus, such as Experian, from CROA’s requirements. The legislation also would ensure that the statute’s critical consumer protections still could be enforced against unscrupulous credit clinics. Recognizing the positive impact of CROA reform on financial literacy in the communities that they represent, several national organizations have signed on to get behind this important effort. Policy resolutions supporting reform of CROA have been adopted by the National Black Caucus of State Legislators, the National Hispanic Caucus of State Legislators, the National Bankers Association and the United States Hispanic Chamber of Commerce. The bottom line is that financial education is extremely important. What is even more critical is the ability to have organizations that are qualified to provide the tools to improve credit standing and advice on how to utilize them. In the end, this will not only help consumers enhance their own financial experience, it will help small business owners be better prepared for potential growth opportunities and stimulate the economy.

Small businesses who send direct mail advertisements to their customers find this to be a highly effective marketing strategy. Where emails can be deleted immediately or never even looked at, people still head to their mailboxes daily. According to the United States Postal Service, 98 percent of people retrieve their mail daily, and 77 percent of people sort it immediately. This gives companies access to an audience who could potentially seek out their business right away. With direct mail marketing, there is a high potential Return on Investment because this type of advertising is extremely targeted. Small businesses can market just to the consumers they think will be most likely to purchase from them - rather than mass advertising through television on email campaigns. Direct mail proves to be a more personal way to reach potential and existing customers, and it encourages businesses to build a relationship with their customers. There is measurable feedback on direct mailing campaigns because businesses can directly count how many responses they see to their advertisements or how many people use their coupons, for instance. To make the best use of direct mail marketing, businesses can purchases data append services to update and provide more information to their existing prospect or customer lists. They also can purchase mailing lists relevant to the types of people they are looking to sell to in order to best target prospects in the area. Sources http://www.delivermagazine.com/2012/01/outside-the-box-direct-mail-continues-to-prove-its-worth/ http://oneims.com/blog/2010/03/22/6-benefits-of-direct-mail-marketing-campaigns/ https://www.usps.com/business/direct-mail-benefits.htm

When it comes to your employees, avoid these two common business mistakes.

4 ways to navigate launching a new business with a family member.

Today’s social media platforms represent enormous opportunity as well as enormous risk, as users increasingly share their opinions about businesses they frequent. If you aren’t paying attention to what your customers are saying about you online, then you’re leaving yourself open to their negative comments, while also potentially losing opportunities to react to positive reviews. To help manage your online reputation proactively, it’s imperative that you reach out to customers and ask for their testimonials. You can then use these positive reviews to implement reputation management strategies that attract positive attention for your brand. For instance, incorporate user review features on your Website that allow your customers to review products they purchase from your company. When a customer makes a purchase, send a follow-up email, allowing enough time for the item to ship and the customer to receive it, and ask for a review. You can then post the reviews on Facebook and Twitter as well as incorporate social features on your site that let users share their reviews, “like” your products and so on. If you fail to nab these opportunities, then you’re leaving it to your customers to post their opinions in their own social pages, where you likely won’t have an opportunity to respond to their comments. You also risk having these comments dominate in search engine results, as opposed to having the positive outweigh the negative. With proactive reputation management, you’ll create a positive impression with your customers. You’ll also have a better chance of getting more customers, as prospects read the good reviews and make their buying decisions.

Getting buyers to your Website is only half the battle in terms of your online marketing efforts. Once they’re there, you want them to buy — not click elsewhere or, worse, get nanoseconds away from a purchase only to abandon their shopping carts. It’s these abandoned carts that can be the most baffling. How could they get so close to buying and then simply click away? The answers are complex, but there is hope. Try out these five simple strategies, and start increasing your ecommerce conversions today: 1. Keep it simple. How many people do you know who like filling out long forms? Probably not many. Limit the first page of your checkout page to requesting the customer’s first name and email address. The reason is twofold: You’ll keep the customer engaged and moving quickly through the checkout process, and you’ll also have his or her contact information in case that customer abandons the cart. That way, you can initiate an abandoned cart nurturing campaign via email if necessary. 2. Follow up quickly. Re-engage with abandoned-cart customers right away, at least within 24 hours, to reinforce the reasons they wanted to buy your product in the first place. The more you can remind them of the connections they had with your brand and your products, the more likely they will be to revisit your site and complete their checkout. 3. Be helpful. Don’t assume your customer abandoned the cart because of price. Instead, follow up with an email expressing concern that a technical error may have prevented the customer from completing the order. Use it as an opportunity to highlight your competitive advantages, such as above-and-beyond customer service and unbeatable quality. Include a customer service phone number in case the customer wants to speak with someone or needs help completing the checkout. 4. Make a special offer. Your first or second follow-up email can include a coupon as an incentive to complete the purchase. Doing so will increase your conversions, particularly if the customer abandoned the cart based on pricing.  5. Be persistent, but not pesky. If your initial first or second emails don’t result in conversions, try offering more information about the product or your company. For instance, it’s a good idea to have some customer case studies and testimonials in your back pocket from customers who have raved about your products. Gently remind customers about your business without overwhelming them, as too many emails could mean opt-outs. By addressing multiple concerns in your abandoned-cart email campaigns, including shipping concerns, product benefits, pricing considerations and more, you’ll be more likely to touch on the reasons that a customer clicked away. These automated messages can prove priceless for your conversions.