1. Unit 3:Money Management Charlie Fletcher

2. Opening a Bank Account Start by selecting the bank you want to work with--think small-business-friendly-- and call to arrange an appointment to open an account. 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. Next step will be to deposit funds into your new account

3. Bookkeeping You can; 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. Most accounting software programs allow you to create invoices, track bank account balances and merchant account information, and keep track of accounts payable and receivable. You may wish to hire a bookkeeper to do your books on a monthly basis and a chartered accountant to audit the books quarterly and prepare year-end business statements and tax returns. To find an accountant or bookkeeper in your area, you can contact the U.S. Association of Chartered Accountants or the American Institute of Professional Bookkeepers.

4. Accepting Cash, Checks and Debit Cards 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. Debit cards are another option, but to accept them, you will need to buy or rent a debit card terminal Equipment will set you back about $40 per month for a terminal and about $100 per month for a cellular terminal, plus the cost of the telephone line or cellular service. There is also a transaction fee charged by the bank and payable by you every time there is a debit card transaction, If you're running a service business, one the most popular way people still pay for services is with a check. Ask to see a photo ID and write the customer's driver's license number on the check. If more than $100 then ask the buyer to get the check certified or pay with a bank draft Cash is the first way to get paid, which is great because it's liquid and there's no processing time required. Pro: use it to pay bills and invest in business-building activities to increase revenues and profits. Con: risky because you could get robbed or lose it.

5. Opening a Credit Card Merchant Account Get started by visiting your bank or credit union or by contacting a merchant account broker such as 1st American Card Service, Cardservice International or Merchant Account Express to inquire about opening an account. If your credit is poor the next best option is to open an account with an online payment service provider, which is discussed in the next section. The advantages of opening a credit card merchant account enabling you to accept credit card payments are numerous You can accept credit card payments online, over the telephone, by mail and in person, as well as sell services on an installment basis 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.

6. Online Payment Services 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. The advantages of online payment services are that they're quick, easy and cheap to open, regardless of your credit rating or anticipated sales volumes, and you can receive payment from any customer with an e-mail account. The only real disadvantage is that most services redirect your customers to their website to complete the transaction. This can confuse people who in some cases will abandon the purchase. Nonetheless, the advantages of online payment services far outweigh any disadvantages.

7. Establishing Payment Terms It's important to establish clear, written payment terms with clients prior to providing services or delivering product. Your payment terms should be printed on your estimate forms, included in formal contracts and work orders, and printed on your final invoices and monthly account statements. You will also have to be flexible enough to meet clients' needs on an individual basis

8. Securing Deposits 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. If you're supplying labor only, try to secure a deposit of at least one-third to one- half of the total value of the contract in advance of providing any services. Your order form or contract should have the deposit information clearly stated. Information on canceled orders or contracts and your refund policy should also be on your forms. Securing a deposit is your best way of ensuring that, at minimum, basic out-of-pocket costs are covered should the customer cancel the job or contract.

9. Progress Payments The key to successfully securing progress payments is to prearrange your contract and payment terms. 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 completion. Or you may arrange for more concrete progress payments based on indicators that are relevant to the specific scope of work, the job or the services provided.

10. Extending Credit As a general rule, when a transaction is complete you should be paid in full. However, in the case of business-to-business sales, commercial clients will generally want some type of credit on a revolving-account basis, such as 30, 60, 90 or sometimes 120 days after delivery of the product or completion of the service. Ideally, you want to be paid as quickly as possible, so you might want to offer a 2- percent discount if invoices are paid within one week. Make sure to conduct a credit check first All three credit bureaus compile and maintain credit files on just about every person, business and organization that has ever applied for credit.

11. Debt Collection The first rule of getting paid is to keep the lines of communication open with your delinquent client, and keep the pressure on to get paid through the use of nonthreatening telephone calls, letters and personal visits. You cannot legally intimidate clients into paying you, but you can explain why it is in their best interest to pay you--namely, to keep your business relationship intact, that nonpayment can hurt their credit rating or that you may sue them if they do not pay. Another option is to hire a collection agency to collect the outstanding debt. Your final option is to take the delinquent account to small-claims court, but remember that small-claims courts have limits as to how much you can sue for in your state or province, ranging from $1,500 to $25,000. Filing fees vary by state and province as well, and these must be paid upfront. But if you win, the fees are added to your award.