24 August 2009

7 easy ways to save money in your pocket

Cash reconciliation time is never a happy time for us. Almost always we end up with less cash than calculated and then Geoff does a clean of the van  and comes up with the receipts he had just dumped quickly into the glovebox or finds one stuck inside the pages of the diary  and finally we are evenly reconciled. Needless to say, we waste much more time looking for these "lost" receipts than saved when they were just dumped quickly into whatever was near at the time!

Last night was one of the worst episodes where we finally had to give up. I had to assume that he has probably used the cash for personal purposes which he has now forgotten. We surely missed out on some business deductions, but without records we could do nothing. The only thing good out of it is that I had the opportunity of drilling into Geoff the importance of discipline for success of a small business. Hopefully now, receipts will never go missing again and I will live in a world of happily(reconciled)-ever-after!!

Here are some ways you can make this much easier than it sounds:

  • Have a separate cash box for your business and use it only and only for the business
  • Have a cash receipt book and note down every incoming or outgoing transaction, however small or big they may be. Do not round off and do not discard coins.
  • Create a separate box/file/bag for business bills and receipts. Do not dump them in your personal wallet or glovebox or diary. Do not mix business and personal purchases in the same bill, so if you buy some materials from Bunnings and decide to buy something for your garden, tell them to give you 2 separate bills
  • Note down name, address, contact number for every prospect and customer. Give them a receipt for any payment and keep a copy for your records
  • Ask for receipts for everything. This is also required for GST credit
  • Have a separate bank account and credit card for the business.
  • Try to use credit card for every purchase and bill payment. It is better for an audit trail, but more importantly, it achieves better cash flow. Pay off the credit card every month and be careful not to go into overdraft on the bank account or take cash out of credit card. There are cheaper ways of accessing credit!
Once you make this a habit, these will seem less of the painful tasks that they seem now and become just an easy part of your lifestyle you dont stop to think about.