How to Track Payments Effectively
Startups need customer payments to survive and grow. But keeping an eye on your accounts receivable can be a time-consuming task, so here are some ways to help.
Running a business is hard enough with just staff management and productivity. And by adding expenses and payments to the mix, a startup owner now has to be an accountant as well.
However, tracking when a business receives payments is a vital step in keeping a company afloat. The company depends on the revenue to pay expenses and staff after all.
While there are no surefire ways to maintain an error-free log of all payments, there are ways to significantly reduce the risks of bookkeeping errors. These tips will let a company do just that and allow them to spend less time worrying about processing payments and more on charging and delivering.
Tip #1. Figure Out Payment Methods
The best payment methods often depend on the business model.
A retail startup may have to accept payments on-site and online since more people than ever prefer mail order. However, a company that services other businesses or large clients can opt to send monthly invoices instead.
Knowing what payment methods are best for the industry also means taking into account the costs of payment processing, which is always platform-dependent.
Tip #2. Separation for Success
Some types of payments will invariably come in the form of a paper cheque, while others could be digital payments. Keeping track of the interactions between various clients can be a nightmare as is, and recording the type of payment received can only amp up the difficulty level.
However, you’d better believe that saving a digital copy of the receipts will pay off in the long run.
Additionally, a startup owner should always open a separate business account for the company. Keeping track of incoming payments will be easier when personal expenditures are out of the way.
Tip #3. Use Accounting Software
Most startups can make do with using Excel to track expenses and payments. But it can be worthwhile to invest in a dedicated bookkeeping software package that will also support future company growth.
Choosing the correct software is another matter. Cloud-based platforms have become the norm, with a level of ease of use, connectivity, and accessibility that trumps traditional systems.
Furthermore, a business will need to decide whether to allow multiple staff members to access the accounting program. For a startup, it might save time to allow everyone to input payments instead of delegating a single person to the task.
Tip #4. Hire an Accountant or Outsource
If all else fails, professional accountants are the way to go.
They are certified and have experience working with companies of various sizes and sectors. An accounting firm will also provide valuable advice on opening accounts and payment tracking, where the most qualified can also serve as business advisors.
Outsourcing bookkeeping to another entity might not sound like the safest option, but it can be invaluable when it’s time to sort out taxes and financial statements.
Payments to Success
Keeping track of payments as a new business owner might seem impossible, but there are always small steps to getting better at it.
In the beginning, all you might need is an Excel sheet and a business bank account. As the business grows, accountants and software solutions will be the way to go.