The art of financing: effective cash management can boost profits. (Advertising Supplement).If you own a small business, many issues demand your time and attention. At the end of each day, do you look back with a sense of satisfaction at a job well done or do you wonder if you could have made better use of your time? Effective cash management, one of the most critical aspects of running any small business; can save you time and may help improve your profits. As the owner of a small business, ask yourself the following questions. Each "yes" answer represents an expenditure of time and money that can be avoided through an effective cash management system. * Do you call or visit your bank to transfer funds back and forth between your money market and business checking accounts? This task can be eliminated by opening a single cash management account that combines checking, brokerage and lending services. At the end of each business day, the available cash in your company's checking account will be automatically "swept" into your money market funds. In addition to saving time and effort, your working capital will be invested more quickly--and that can help increase your returns. What's more, you'll avoid the overdraft A check that is drawn on an account containing less money than the amount stated on the check. The term overdraft is also used in reference to the condition that exists when vouchers charges that result when manual transfers are either miscalculated or delayed. * Do you call or visit your bank to access your commercial line of creditor to make loan payments? If you qualify for an integrated line of credit, this task too can be eliminated. In general, your line of credit will automatically be accessed whenever the cash in your money market account is depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d . This helps avoid overdraft charges and, because any excess cash in your account will automatically be used to reduce your credit balance, helps minimize your interest expenses. * Do you review all your company's business charge card expenses in an attempt to keep them to a minimum? By choosing a business charge card account that provides a separate number for each employee who is issued a card, tracking your company's purchases becomes much easier. Some cards even feature individual authorization limits that allow you to decide how much purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. each employee will receive. Other possible benefits include delayed debits, which allow funds used for purchases to remain invested longer, and rewards-programs that offer free travel and complimentary business items. * At the end of each year do you comb comb 1. a vascular, red cutaneous structure attached in a sagittal plane to the dorsum of the skull of domestic fowl. It consists of a base attached to the skull, a central mass called the body, a backward projecting blade and upward projecting points. 2. through your expense records looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. tax deductions Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. ? Some cash management accounts enable you to code your checks as they are written and will categorize cat·e·go·rize tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es To put into a category or categories; classify. cat the expenses in your monthly and annual account statements. This can help save your company the time and money that would otherwise have been lost on each overlooked deduction. * Do you try and calculate all activity since your last monthly statement when determining if you have sufficient funds to take advantage of an upcoming business opportunity? A cash management account with 24-hour Internet access See how to access the Internet. can provide you with complete account information that is accessible at any time from your personal computer, which can help you take more timely advantage of future business opportunities. * Do you manually process customer payments and prepare deposit slips before hand delivering them to your bank? A lockbox Lockbox A collection and processing service provided to firms by banks, which collect payments from a dedicated postal box to which the firm directs its customers to send payment to. service can perform these services for you and accelerate the collection of your receivables. After receiving your customers' payments in the mail, the financial institution providing your lockbox service will clear the checks, enter the deposits into your account and prepare a detailed statement. Using a lockbox service can cut days off the time needed to turn your receivables into cash. * Do you mail or deliver charge and debit card debit card, card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser's checking account. They can also be used at automated teller machines for withdrawing cash from the user's checking account. sales records to your bank? Electronic card processing services can eliminate this chore and take over your daily and monthly record keeping tasks. Your accounts will be reconciled daily and the information transmitted to your financial institution through a point-of-sale terminal. Monthly summary statements are also generally provided. Moreover, card payments can be automatically credited to your account and swept into your money market funds to begin earning interest as soon as possible. * Do you prepare your own payroll? This tedious and time-consuming task can't be avoided, but it can be handled by outside professionals. Even small companies can save money by outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. their payroll processing. In most cases, a professional payroll processor will: calculate your payroll each pay period; prepare employee earnings statements; provide direct deposit arrangements; determine and deposit federal, state and all other withholding taxes The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. ; and file quarterly and year-end tax returns for your business. All of these can save your company time and help avoid payroll mistakes and late or inaccurate tax filings. Please note that this article does not constitute tax or legal advice. Consult your tax or legal advisor before making any tax- or legally-related investment decisions. This article is published for general informational purposes only and is not an offer or solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual to sell or buy any securities or commodities. Any particular investment should be analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. based on its terms and risks as they relate to your individual circumstances and objectives. Ken Brozki and Stephen Meli are Financial Advisors with Morgan Stanley's Glendale office. For more information, please call them at (818) 502-4022. |
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