New Years Bookkeeping Resolution # 5: Prompt Payment
How do you go about paying bills for your small business? If you are like most, you probably put off writing that check until the very last possible minute – either because you misplaced the statement, are waiting to have enough money in the bank, or hate dealing with paperwork. Putting off paying bills will only lead to more problems and cost you more money, which is why you need the following resolution for 2011:
Resolution #5: I will pay my bills on time and avoid late fees, penalties and interest.
If you are paying late simply because you are disorganized and have a bill phobia, then you will incur added interest and late fee charges that could be easily avoided. Some vendors may even give you a discount if you pay by a certain time. Getting organized and paying your bills on time is even more important for business owners than for consumers. Dun & Bradstreet is a credit bureau that only monitors business credit. It maintains data based not only on whether you pay your bills on time, but gives a higher “Paydex” score to businesses that pay bills in advance. The higher your Paydex score, the better deals you may be able to get when you apply for loans to expand your business.
Start the new year by establishing a regular schedule – whether that means handling each bill as it comes in, sitting down with the checkbook on the 1st and 15th of every month, or handing the whole thing over to someone else. Contact your vendors to see if they offer automatic bill payments. Each month, payments will be automatically charged to your business credit card or debited from your bank account, and you’ll never have to worry about due dates or missed payments again.
In addition to saving your business money, paying on time will also help establish a good reputation in your business community and ensure excellent future service from your vendors. Most importantly, keeping current on your accounts payable tells you that you are taking the right steps to keep your business viable.