Imagine the opportunity costs you give in exchange for bank fees. A $15 returned check here and a $34 bounced check there can really add up in a small business. Not to mention how much it drains your profits. Bank fees are a cost of business but with a bit of discipline you can get them under control.
Keep check registers accurate.
One cause of bank overdrafts is not keeping track of outstanding checks. How many times have you issued a payment to a vendor that didn’t clear right away? You check your bank account to see how much money is there but may overlook the checks and ATM withdrawals that are still outstanding. Instead of relying solely on what the bank reports, cross-check it with your internal records. To avoid overdrawing your account, be sure to keep an eye on checks that you write that vendors have not cashed and deposits that may still be on hold.
Monitor your account balance.
Two convenient ways to check your bank balance is by with online banking and access by phone. Financial institutions are making money management even more convenient by offering solutions like mobile banking. These apps are a great way to stay on top of your balances with features like mobile alerts. In either case, 24-7 access reports transactions and balances in real time. Remember, what you see on the check book register is not always what you get so be sure to take advantage of these tools and make any adjustments.
Budget. Budget. Budget.
Estimating cash flow means figuring out how much money you expect to have and when it should be available to pay your bills. The key to remember is a forecast is only your best guess. It is a tool that gives you an idea of where your business stands financially. However, as with most things concerning business, there is no guarantee. When it comes to managing money, it all boils down to this: Cut checks and make payments only after you know for sure that adequate funds are there.
So I’d like to know what is your take…
How do you handle money to avoid bounced checks?
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Great post – such good ideas! Sometimes things seem like common sense, but you need to be reminded of it! Thanks for sharing!
It’s taken a number of years, but I’ve finally gotten to the point where I’m not wasting money on overdraft charges! I do all the things you said above, and I’ve gotten even more specific on the “budget” one. I have a number of my regular charges automatically debited from my bank account, and I have scheduled all of them with the vendors so that none of them come out on the same day! Helps keep the cash flow even “smoother”!
this is a simple and very effective tip. thanks for sharing.