​ UNIT 3: MONEY MANAGEMENT By Jakob Kramer 2/25/16

OPENING A BANK ACCOUNT Once you've chosen a name and registered your business, you will need to open a commercial bank account. Setting up a business bank account is easy. However, when you go, make sure you take personal identification as well as your business name registration papers and business license, because these are usually required to open a commercial bank account.

BOOKKEEPING the activity or occupation of keeping records of the financial affairs of a business. When it comes time to set up your financial books, you have two options--do it yourself or hire an accountant or bookkeeper. You might want to do both by keeping your own books and hiring an accountant to prepare year-end financial statements and tax forms.

ACCEPTING CASH, CHECKS AND DEBIT CARDS In today's super-competitive business environment, you must provide customers with many ways to pay, including cash, debit card, credit card and electronic cash. There is a cost to provide these payment options--account fees, transaction fees, equipment rental and merchant fees based on a percentage of the total sales value. Not all banks, merchant accounts and payment processing services are the same, and fees vary widely. You can also check with small business associations such as the chamber of commerce to see if they offer member discounts; it's not uncommon to save as much as 2 percent on credit card merchant fees. Just remember, consumers expect choices when it comes time to pay for their purchases, and if you elect not to provide these choices, expect fewer sales

OPENING A CREDIT CARD MERCHANT ACCOUNT Many consumers have replaced paper money altogether in favor of plastic for buying goods and services. In fact, studies have proven that merchants who accept credit cards can increase sales by up to 50 percent. Not to mention that you can accept credit card payments online, over the telephone, by mail and in person, as well as sell services on an installment basis by obtaining permission to charge your customer's credit card monthly or per agreement. Of course, all these benefits come at a cost, especially when you consider that you'll have to pay an application fee, setup fee, purchase or rent processing equipment and software, pay administration and statement fees, and pay processing and transaction fees ranging from 2 to 8 percent on total sales volume. Once again, these fees must be viewed as the cost of doing business.

ONLINE PAYMENT SERVICES gateway is an e-commerce application service provider service that authorizes credit card payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. PayPal is one of the more popular online payment services with more than 40 million members in 45 countries, offering personal and business account services. Both types of accounts allow funds to be transferred electronically among members, but only the business account enables merchants to accept credit card payments for goods and services.PayPal

ESTABLISHING PAYMENT TERMS Every small-business owner also needs to establish a payment-terms policy. Although you certainly want to standardize the way you get paid, at the same time you will also have to be flexible enough to meet clients' needs on an individual basis. Setting payment terms covers deposits, progress payments and extending credit. It's important to establish clear, written payment terms with clients prior to providing services or delivering product.

SECURING DEPOSITS is a sum of money that the tenant agrees to pay the landlord prior to moving into the rental unit. The amount is usually based on the monthly rent. If you're run a service business, you have to get in the habit of asking clients for a deposit prior to providing services, especially if the work also involves product sales that have to be paid for by you in advance. In this case, the deposit should be for at least the value of the materials.

PROGRESS PAYMENTS are a form of contract financing used with fixed price contracts when acquiring non- commercial items; part of customary contract financing, but preferred over advance payments The key to successfully securing progress payments is to prearrange your contract and payment terms. Agree on the amount that will be due at various stages of the project. You can use percentages to calculate the progress payments, such as 25 percent deposit, 25 percent upon delivery of any materials, 25 percent upon substantial completion, and the balance at completion or within 30 days of substantial completio

EXTENDING CREDIT Allow a purchase on credit; also, permit someone to owe money. In most cases there's no need to extend credit to consumers unless you deliver a service such as pest control that's billed monthly or a major contract that is completed in stages.

DEBT COLLECTION Under the federal Fair Debt Collection Practice Act, a debt collector generally is a person or a company that regularly collects debts owed to others, usually when those debts are past-due. Debt collectors include collection agencies or lawyers who collect debts as part of their business. Another option is to hire a collection agency to collect the outstanding debt. Collection agencies generally charge a percentage of the total amount owed as their fee, which can range up to as much as 50 percent.