Considering the Financial Aspects of Your Company

Starting a company means paying out money and eventually collecting it. Of course, the latter is much more fun! However, both require a banking relationship. There are so many different banks, credit unions, financial businesses out there; it can become overwhelming. Picking a good “partner” is crucial for long term financial success. Here are a few questions to think about when choosing who to do business with.

• What products do they offer?

• How long have they been around?

• Is it local and nationwide?

• What are the fees?

• Is the web application easy to use?

• Are there deposit requirements?

• Do you have a rapport with the person you are dealing with?

Although all of these are important parts of setting up your financial process, the most important one for me is my relationship with my provider. Money isn’t the easiest thing to talk about all the time. No one expects to have money challenges, but starting a business is an invitation for it. Unless you have unlimited resources, you are going to have to talk money with your representative at some point. Being comfortable with the person makes these conversations much easier!

How do you want to pay and get paid? At least 90% of clients and customers no longer issue checks. Additionally, a lot are now virtual. They do not have a brick-and-mortar building. Making sure your clients, employees, and customers know how you pay and when you pay is imperative for a good working relationship. Most likely, this means accepting automated payments or paying online. Having a credit line is probably the easiest to facilitate this, but getting a credit line— not so easy for a new business! I have found that a business credit card works just as well. I typically turn to American Express, but any card that gives you rebates, cash back, extended payment terms will work. The benefits are incredibly important to someone managing cash flow. This allows you to extend accounts payable 30 days, earn points, and many times cash back. There are generally benefits that your employees can receive as well. Air travel perks, special prices on certain items and rental car insurance just to name a few. Of course, it will vary based on your card.

Knowing when the money is coming and when the bills are due, ahead of time, is as important as the cash itself. The financial world has gotten used to seeing financial results on an “after it happens” timeframe. I learned many years ago that this is not the best way to manage cash. You should ALWAYS be looking ahead. Know how much money you will need and when. A cash forecast might sound scary, but you need it. Projecting is the most important thing I do for my business. If you have no idea how to start this…talk to your accountant. Often, they will have a report to use or will help you set something up. Additionally, there are projection applications that can help with this. For example, one called OGantry is incredible for the professional services industry! It allows you to look at where you are financially at any given time. Having this information is vital for hiring decisions, investments and budgeting.

Hopefully, this gives you a little insight to the cash. There are many aspects to consider; no way I could cover everything. However, having good professional partnerships, (CPA, Banker) will ensure that you succeed.

So to recap:

• Have your list of questions to ask before choosing who to do business with.

• Relationships are key: have a good relationship with your financial provider.

• Figure out how you would like to get paid and consider how that will work with your clients, employees and customers.

• Project your financials: Don’t look behind—PROJECT how much money you will need and when you will need it. Look ahead!!!

For now,

Angela