ABC Solutions

Protecting Clients’ Credit Card Numbers

Does your business ask your customers for their credit card numbers at any time during the sales process?  If so, it’s essential that you honor the privacy of your customers’ private data as well as stay in compliance with the Payment Card Industry rules.

Every business that has an account with a merchant services vendor is required to follow PCI (Payment Card Industry) compliance when collecting and storing credit card data. There are many different levels of compliance depending on the technology you use to capture and store credit card data.  These levels depend on whether you use a point of sale terminal, the customer hands you their card, orders are entered through an online shopping cart, or a combination.

In all cases, there are several no-no’s that you’ll want to share with your staff to make sure they are properly trained:

  1. Never ask a client to send a credit card number via unsecure email.
  2. Never take down a credit card number over the phone on paper before entering it into your system. If you do, you need to shred the paper immediately.
  3. Don’t ask clients to take a photo of their credit card to send to you.

If you need to use credit card authorization forms in your business, you’ll need to consider the proper collection of these forms as well as the proper storage. Storing a credit card outside any system requires you to follow further PCI compliance steps.

  1. After a client has signed and completed the credit card authorization form, you will need to provide a secure, encrypted email connection for them to send it back to you. Alternately, you can set up a private client portal for them using Box, DropBox, ShareFile, or another generic portal or file transfer app.  Just sending a pdf via email is not a great idea unless the PDF is password-protected and the password is sent via secure, encrypted email.
  2. Once you’ve received the form on your end, you’ll need to keep it in a secure place. If you print or download it, you’ll need to follow physical building security protocols to stay in compliance with PCI as well as to protect the customer data.

It’s not a surprise that so many credit cards get hacked each year.  It’s inconvenient to customers and vendors when their credit card gets compromised, and much of this can be prevented through proactive and safe measures. Respect your customers and help them keep their credit card data safe.

Does Your Business Have a Safety Net?

One of the most important parts of managing a business is making sure there is enough cash to keep the business going. As a business owner, you probably have a very good idea how much cash you have in the bank at any time. The smaller your business is, the more likely you are to keep a close eye on cash.

Checking your cash balance is a daily function you should be on top of. Yet there is another often-overlooked responsibility that many business owners don’t spend enough time on, and that is managing your future cash, especially in light of unplanned situations. Looking ahead helps reduce your business risk and allows you more time to correct any upcoming dip in your cash balance.

Having enough cash is akin to having a safety net for your business. It can sometimes even mean the difference between staying in business and going out of business. To plan how much you might need for your safety net, you can use a few different methodologies.

One way to plan your safety net is to prepare for the worst-case scenario. How long would your cash hold out if no revenue were to come in but all expenses kept going out? Some questions you might ask:

  • At what point will your cash run out? How many weeks or months of cash do you have?
  • Do you have a line of credit you can tap at a bank?
  • Do you have other loans or sources of cash that you can tap quickly in case of emergency?
  • What expenses could you shut down without hurting your business if you had to?

Another way to plan your safety net is to do what the average business does: acquire the amount of cash you need for two to three months’ worth of operations and keep it on hand. Alternately, you can make a plan to liquidate that much cash on a very fast basis and only put your plan in place if it’s needed.

An easy way to get these numbers is to look at your bank statements in conjunction with your average accounts receivable and accounts payable balances. If that’s all Greek to you, no worries. Feel free to contact us and we can help you figure out a safety net number that you’ll feel comfortable with and that will keep your business risk low.

Once you have a safety net in place, you’ll gain peace of mind for your business. It’s one step in an overall disaster preparedness plan that you can make for your business.

Why Having a Budget Is Important

As an entrepreneur, you likely place a high value on freedom. When the word “budget” is mentioned, you might cringe and feel like it hampers your freedom. But it’s really the opposite. Here’s why.

According to a 2019 article in Small Business Trends, “Startup Statistics – The Numbers You Need to Know,” 82 percent of businesses that fail do so because of cash flow problems. Even if your business is no longer a startup, the failure rates for businesses started in 2014 were as follows:

  • 20 percent failed to make it to their second year,
  • 30 percent failed to make it to their third year,
  • 38 percent failed to make it to their fourth year, and
  • 44 percent failed to make it to their fifth year.

Many of the reasons for business failure can be prevented with good budgeting and planning. Here are some benefits of making a budget and managing to it.

  • A budget helps to control spending by seeing what’s available beyond your cash balance at the time.
  • Impulse spending can be curbed by avoiding spending on anything that is not budgeted for.
  • If a loan is needed to finance the business, you have a better idea of how much you need and how to best schedule the loan payments.
  • Your chances of business success increase with a budget.
  • You can see future revenue shortfalls so that you can take proactive steps to boost sales.
  • You can better manage growth.
  • You have a better idea of your profit level so you can make pricing changes, tax predictions, appropriate compensation, and other strategic changes.
  • You can plan for large expenditures such as asset purchases and time them better for cash flow, loan acquisition, and other considerations.

Getting started with a budget is easy. If you’ve been in business for more than one year, you can start with last year’s actual figures and then adjust for the growth and changes you want. The numbers can be input into your accounting system so that you can get reports that measure actual progress versus the budget numbers. You can then make good business decisions based on your variances.

When you take a little bit of time to create a budget, you really can enjoy the freedom of knowing you’re on track to make your numbers. If we’re not already working with you on your budget, feel free to reach out to find out more.

Five Key Reports for Your Business

Each month, your accounting system yields actionable information for you to run your business better. Here are some key reports that all business owners should review every month.

Balance Sheet

A quick review of the balance sheet can tell you the balances of your current assets and current liabilities. Current assets should always be larger than current liabilities; if it’s not, you may have liquidity issues.

You can also take a look at these accounts: cash, accounts receivable, and accounts payable. They should look reasonable to you based on your business history.

Accounts Receivable Aging

Your gaining report can alert you to who has not paid their invoice, so that you can take action to collect that money. Any balances over 30 days should trigger a collection process since the older the receivable gets, the less likely it is to collect.

Accounts Payable Aging

Hopefully, this report is clean and you are able to pay all of your bills on time. If you have an unusually large amount in this account, you’ll want to make sure you have the future cash to pay the bills.

Income Statement

The first number most entrepreneurs look at on the income statement is profit. It’s a good idea to review every account balance on this report to see if it is what you expected. Some questions to ask yourself include:

  1. Did I generate the amount of revenue that I expected? If not, should I ramp up marketing for the next few months?
  2. Do all of my expenses look reasonable? Are there any numbers that look too high?
  3. Are my payroll expenses in line with what I was expecting?
  4. Which accounts caused me to generate more or less profit?
  5. What I can I do next month to improve performance and increase profit?

Sales Reports

There are many excellent sales reports to dive deeper into your revenue so you can see what sold and what didn’t. Sales by Item and Sales by Customer are two good options for you to get more detail about your revenue balances. By analyzing your revenue, you can see what promotions worked and how you might take action to increase sales.

These five reports are very basic, but they are also very key to your business. To profit from these reports, it’s up to you to take action in your business to improve your success.

Mid-Year Review

Can you believe that half of 2019 is gone already? That means it’s a great time to take stock of how your business has done for the first half of 2019 so that you can meet your financial goals for the entire year. 

On Track for Sales

Are you on track to make your 2019 revenue number?  The first step is to check your 2019 budget numbers for total revenue. (Don’t have a budget? – Check with us; we’d be delighted to discuss that service with you.)

Next, get your Income Statement for June 2019 Year-to-Date and check the revenue figure. Are you on track with your budget, or are you halfway there revenue-wise, accounting for seasonality? If so, pat yourself on the back!  If not, what promotions will you put in place to boost your growth for the rest of 2019?

On Track for Profit

Looking at the same Income Statement, check your net income figure. Are you on track with what you planned?  If so, great!  If not, the reason is simple: it will be either lower sales than expected or higher expenses than expected. 

If your expenses are too high, you’ll need to drill down into each of your expense accounts, including cost of goods sold, to see which ones are higher than expected. Were there some unanticipated costs?  Does your pricing need adjusting? Do you need more volume to cover your costs?  This is where we can help you with an analysis of where your opportunities are to increase profit. 

On Track for Cash

One more place to look is your cash balance. It can be uncomfortable when you are running short of cash for your business. If your balance is lower than you’d like it to be, it could be because of some of the factors mentioned above.  It could also be because you just purchased an asset like a truck.  If you need help with improving your cash flow, that’s another thing we can help you with. 

Mid-Year Review

This mid-year review can help you head off any small problems before they grow into big ones throughout the rest of the year. And it can keep you on track so you can meet your 2019 business goals.