As a successful business owner, you never want to run into a situation where you end up with a cash flow problem. There is nothing that can ruin your credibility with suppliers faster than handing over a check that bounces. You’ve hired an office manager to handle your finances, but you’re spending money that she doesn’t know about. Then, she pays the bills thinking there’s money in the bank only to discover that those checks are bouncing. This causes embarrassment, leads to extra fees and may even lead to business failure.
Accountability is key. Here are some steps you can take to ensure that your checks don’t bounce:
- 1. Get an accounting system that you can access and review online or on the go.
- 2. Put processes in place so that you know when the system is up-to-date and check it with regular frequency.
- 3. Communicate with your office manager, especially if you’re making expensive or high volume purchases.
It’s essential to have an accounting system in place that can be accessed at any given time. That said, a system is only as good as the people that are operating it. This means that it’s absolutely essential that anyone within the company who has power to write a check needs to make sure that the amount being spent is posted as quickly as possible. The information provided by the accounting system needs to be up to date so that the correct financial decisions can be made every time.
One way to make that happen is to set up a process of posting and checking that everyone strictly adheres to. Setting up specific days for posting checks written and accounts received means that you should be able to tell the current state of your business account at a moment’s notice. It will also prevent you from making financial decisions based on out-of-date information. This is especially true when making a large financial purchase that could end up throwing everything out of whack very quickly.
Perhaps as important as having an accounting system and an updating process in place is keeping the lines of communication open. As the business owner, you may feel that you have total authority to spend as freely as you like, but doing so without telling the manager puts them in a difficult spot. After all, it is they who will have to field the calls from disgruntled suppliers who have just received a check from you that bounced. If they are unaware that you have made a major purchase that dropped the account balance below what the system shows, they will be unable to explain what the issue is.
Don’t Bounce Checks
It is absolutely impossible to run a successful business if you are not aware of your finances at all times. Writing checks without any forethought will hurt you in a number of ways. You will end up drowning in bank fees and more importantly will lose the trust of the people that you purchase from. You may just find that suppliers will move you to COD status, or may even decide that your business is not worth dealing with. The ripple effect that comes from writing bad checks may very well be enough to close it down permanently.