1. Follow-up on Unpaid Invoices
If you are weekly sending out your invoices and applying the payments you receive, you will be able to see at a glance which invoices have been paid and which haven’t. Having your bookkeeping set up on the computer will make it easy to calculate which unpaid invoices are the oldest and how many days they have gone unpaid.
Staying on top of this is critical, because if you let too much time go by before you handle this, it can become impossible to collect. Each month, resend a copy of the invoice, a statement, or an email with the information. Whatever means you use, make a contact with the customer regarding their unpaid invoice, letting them know that payment is due.
2. Pay Yourself
Do I have to remind you? You’re welcome! The easiest thing to do, is determine how much a month you will be receiving. Then set an automatic transfer each month from your business account to your personal. If you’re not quite there yet, just make this your reminder to take your cut each month.
3. Reconcile Bank Accounts
This really does need to be done monthly. By doing this, you can catch errors in your account or in your bookkeeping, or possibly find fraud that could be happening there.
It’s not as difficult as it seems, even if you’re having to do it by hand. Here’s a rundown: Take your monthly bank statement. Match all your known deposits, checks and other withdrawls. Investigate anything that might be on the statement, that you weren’t expecting.
Here’s the math: Start with last month’s ending bank balance. Add all the deposits you have recorded. Subtract all your checks, debit card payments, etc. Add back in any check or withdrawl that wasn’t cleared in the account before the statement was made. Subtract any deposit that didn’t get recorded before the statement. The sum of these should be the new ending balance on your bank’s statement. If it is not, you have some investigating to do.
4. Print & Review Reports
This is especially easy if you have bookkeeping software. After getting your bookkeeping up to date for the month, print out reports for the month. I suggest printing a Balance Sheet and a Profit & Loss Statement. These will give you a snapshot of your business’ health, and of how it performed the previous month.
The information you receive from monthly reports like these will help you when you are making decisions about your business. You can use this information to make goals for the next month, or to make alterations to how you are conducting your business. It’s priceless!