Back office blues

There are a few simple steps you can take to organize your administrative world.

Photo courtesy of The Greenskeeper

Years ago, I remember having a conversation with my accountant about how many of her clients would hand her shoe boxes full of receipts at the end of the year and expect her to sort through them in order to prepare their taxes. She expressed frustration over this, and rightly so. In order to run a successful business, we cannot be throwing all of our receipts in a box. Instead, we need to be organized, although I admit that this can be a big challenge.

Many times we are so busy returning phone calls, meeting with customers and doing actual landscaping work, our office takes last place. However, having an organized office saves money by keeping us efficient, diminishes the frustration that naturally comes with disorganization and gives us access to real-time information about our profits and expenses.

You may be thinking that you agree with me. You know that you should organize your office, but you just don’t know where to begin. Hopefully, after reading this article, you will have some ideas to put into practice.

Use technology.

There are a few key things that need to be in place before you get started. First, I would recommend you find a good software program. You will find this is worth every penny of your investment, no matter if you gross $40,000 or $4 million per year. In our company we use QuickBooks as our main accounting software and then two additional landscape-specific programs that link to QuickBooks and help us with routing, designing and billing.

There are a lot of programs out there so be sure to take your time and pick the one that is right for your company. If you choose not to use a computer for your bookwork, then it is critical you head to your local office supply store and invest in what you need for keeping accurate records.

Make the time.

The second key thing every business owner needs to give in order to have an organized office is time. Whether it is your own personal time or the time of a trusted employee, someone needs to be designated to do this job on a consistent basis. It isn’t something that can be done once a month or every other week. Daily is best and weekly is doable.

Once you have figured out what method you are going to use to keep your books and who is going to invest their time to organize the office and then maintain that organization, it is time to take a realistic look at your office and get started. If you have piles and piles of receipts and bills laying around, it is time to buy a good file cabinet, hanging files and file folders.

Pay the bills.

Let’s start with accounts payables. Enter each bill into your accounting software and then file it in a folder labeled ‘unpaid bills.’ Pay bills on a biweekly basis and then file any hard copies in alphabetical folders designated for this use.

Use all 30 days to pay your bills if you so choose, but do not go over the 30 days or you will end up paying a finance charge. There are two options to use when paying bills – computer-printed (or hand-written) checks or automatic payments via credit cards or a deduction from your bank account. Never use a credit card for an automatic payment unless you have the funds to pay it off each month. Doing so sets you up to operate in constant debt. If you set up automatic payments for utilities, cellphone and other regular monthly bills, you will avoid paying finance charges for late payments. Of course, this means you need to always have enough in your checking account to cover these bills.

If you just don’t have the cash flow to pay bills in a timely fashion, it is important to be in communication with the vendor. Offering to pay a small portion of the bill or make monthly payments will aid in keeping your company in good standing with vendors. In our early days, we had some situations like this and we found most vendors to be very amenable to the idea of accepting small installments as we worked to pay an account in full. Never ignore bills or pretend they don’t exist.

Having an organized office saves The Greenskeeper money by diminishing the frustration that comes with disorganization, and gives employees access to real-time information about profits and expenses.
Photo courtesy of The Greenskeeper

One way to make sure you never have to worry about not paying your bills is to make sure you invoice your jobs on time. Cash flow is considerably enhanced when jobs are billed in a timely manner. Using your software (or a handwritten invoice, if you prefer), give your best efforts to invoice your customers within a week for one-time jobs (such as landscape projects) or per month for weekly jobs (such as mowing).

Never demand payment immediately when a job is completed as this indicates you’re a poor money manager and are struggling financially.

Here in our company we are set up on 30 days, but anywhere between 15 and 30 days is best for all involved. It doesn’t appear too demanding but it keeps the cash flow coming in.

Collect your money.

Once you have billed your customers, email or send the invoice and then file any hard copies alphabetically. Be sure to look at your accounts receivable report once a month to make sure customers are paying you in a timely fashion.

If you have a non-paying customer, first, it is important you contact them and make sure there are no problems. If they’re upset about something that’s your responsibility like a dying plant or a broken window, see that it’s fixed before demanding your money. Once you’re assured there aren’t any problems, contact them once a week until payment is made in full. Always be courteous and gentle.

If you are still having trouble receiving payment, you have a few options. In our company, we generally choose to write off anything less than $1,000. If it is over that, we head to small claims court. If you choose to go this direction, it is imperative you have a signed contract stating all the details of the work.

You can also use a collection agency if you would prefer to hand over the hassle to someone else. Thankfully, most customers have integrity and are willing to work things out so court or a collection agency is rarely necessary.

Once you’ve been in business for a while, you may need to hire a few employees. This is one area where you want to make sure you do things properly. When we hired our first employee more than 30 years ago, we had no idea what we were doing and made a mess. It took us a long time to find a contact at the IRS who would help us sort through all of the mistakes we made. This taught us an important lesson to pass along to others just beginning their own companies: Know what you are doing before you hire an employee.

If you’ve already hired one and find yourself in the same fix we did, I suggest you keep calling the IRS until you find someone willing to work with you in a kind and courteous manner. It took many phone calls, but once I found someone who took some interest in my case, she became a lifesaver.

If you have software such as QuickBooks, it will calculate payroll taxes for you. If you do not, you will need to do this on your own. Whichever way you choose, make sure paying your payroll taxes is a priority. Start a savings account just for this, if you need to, so that you have the money available when you need it and aren’t tempted to put it off.

If you decide you don’t want to hassle with calculating payroll, you can contract with a payroll company to do it for you. This is the safest way to keep from making costly errors, but it can be expensive.

If you start putting some of these ideas in place today, you will be well on your way to having your own organized office.

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