small-business – Susan's Reflections

Tools to Help Small Business Owners Track and Organize Business Receipts

As we discussed in the last blog, keeping track of business receipts and invoices can be challenging for small business owners, especially given how busy they are. Fortunately, there are a variety of small business receipt tracking tools available to make organization much easier.

Why Digitize Your Receipts?

It is a good idea to invest in a scanner or a phone scanning app so you can store receipts electronically. Over time, the ink on receipts can fade. Receipts can also become unreadable due to wrinkles or smudges, and they can easily be misplaced. To avoid these issues, scan your receipts soon after each purchase.

Once your receipts are scanned, you need a system to organize them.

I no longer own a pizza restaurant, but I do manage an Airbnb property. For this business, I organize my receipts into digital folders by category. Most of my expenses are set up on auto-pay, which makes tracking much easier. Other bills are emailed to me, allowing me to download them as PDFs and store them electronically. As a result, I have very few paper receipts to manage.

This simple method of scanning and organizing digital files works well for me. However, if I were still running a restaurant, I would likely need a more robust solution. Below are several receipt tracking apps you may want to consider for managing receipts and expenses in your small business.

Shoeboxed

Shoeboxed is both a receipt scanning app and a receipt scanning service. If you have accumulated a large number of paper receipts, you can save time by mailing them to Shoeboxed, where they will be scanned and uploaded for you.

You can scan receipts with your phone or mail them in for processing, and forward emailed receipts directly into the app. It uses Optical Character Recognition (OCR) to convert receipts into searchable text, letting you search by vendor, date, or expense category. The app automatically organizes receipts based on your preferences and includes mileage tracking along with human data verification for accuracy. It also integrates with many popular accounting systems.

Best for: Small business owners, freelancers, consultants, nonprofits, and anyone managing a high volume of receipts

Considerations:

• Not as strong for full expense tracking compared to accounting platforms

• Pricing increases with the volume of receipts

• Not a complete accounting system

Wave Receipts

Wave Receipts is part of the Wave platform and works alongside Wave Accounting. It allows small business owners to capture receipts and automatically integrate them into their accounting records. It is not a standalone receipt management system.

You can scan receipts using your phone or upload them via email. It integrates seamlessly with Wave’s free accounting software with no limit on the number of receipts you can upload. The tool automatically creates expense transactions from your receipts and matches them with bank transactions to reduce duplication, while cloud storage makes retrieval simple.

Best for: Very small businesses, freelancers, and startups looking for a budget-friendly option

Considerations:

• Limited integration with other accounting systems

• Fewer organizational features compared to more advanced tools

Neat Receipts

Neat Receipts is a simple receipt scanning and management system. It is essentially a modern, cloud-based version of a desktop filing system.

You can capture receipts via email, photo, scan, or upload, and it uses OCR technology with human verification for high accuracy. This creates searchable, organized records and provides a clear audit trail for tax and accounting purposes. It integrates with QuickBooks and other accounting systems, making it easy to keep everything in one organized place.

Best for: Very small businesses with a large number of paper receipts that already use an accounting system

Considerations:

• Primarily a filing system rather than a full accounting solution

• Limited accounting features

• Requires an annual subscription paid upfront

FreshBooks

FreshBooks is a full accounting platform designed for very small businesses. In addition to receipt tracking, it includes invoicing, proposals, time tracking, and bank reconciliation.

The mobile app lets you scan receipts on the go, and it automatically categorizes expenses while allowing you to email receipts directly into the system. It links receipts to bank transactions and combines receipt management, expense tracking, and invoicing in one convenient platform. You can also generate tax reports and profit-and-loss statements, plus it offers access to accounting support.

Best for: Solopreneurs, service-based businesses, and consultants who want an all-in-one system

Considerations:

• May be more than you need if you only want receipt management

• You may pay for features you do not plan to use

Which Receipt Tracking Tool Is Right for You?

All of these tools offer strong options for managing receipts and small business expense management. The right choice depends on your business needs, the volume of receipts you handle, and whether you want a standalone system or a full accounting platform.

Here is a simple guide to help you decide:

Choose Shoeboxed if:

• You have a large volume of paper receipts

• You want audit-ready records with minimal effort

• You already use separate accounting software

Choose Wave Receipts if:

• You want a low-cost, simple solution

• Your finances are straightforward

• You want receipts tied directly to basic bookkeeping

Choose Neat Receipts if:

• You want well-organized records with light accounting support

• You prefer structured, guided workflows

• You already use accounting software and just need better organization

Choose FreshBooks if:

• You run a service-based business

• You invoice clients and track billable expenses

• You want a polished, all-in-one accounting system.

Have you tried any of these systems? If so, I would love to hear about your experience.

5 Simple Tips to Keep Your Business Receipts Organized

Running a small business means keeping track of many financial details, and one of the most important is organizing your receipts and invoices.

Good record keeping not only helps you understand where your money is going, but it also makes tax preparation easier and protects you if your business is ever audited. With a few simple systems, you can organize your business receipts and stay on top of your expenses without adding more stress to your busy schedule.

Serving customers, building relationships, networking, paying bills, sending invoices, and managing employees is the life of a small business owner. With so many moving parts, it’s easy for small details to slip through the cracks. That’s why having a simple system to organize your business expenses and receipts is so important.

My husband and I owned our restaurant in the days before phone apps, cloud storage, and doing many tasks online. I had to keep track of paper receipts and bills. My favorite tool was an accordion file. It had a pocket for each month. When my produce supplier made his twice-a-week delivery, the invoices went into my accordion file. When I paid the window washer, the receipt went into the file. When I paid a bill for the business, I wrote the check number and date paid on the bill and slid it into the file. At the end of each month, I totaled my expenses by category and entered them into a spreadsheet. At the end of the year, all my receipts were in my accordion file so that I could easily verify my expenses. Then the receipts went into a manilla envelope to be saved in case I needed them in the future.

Today, there are alternatives to mailing invoices and writing paper checks, which make record keeping easier. Yet, many business owners still find it challenging to keep track of their business receipts. Below are some easy tips to help you keep your business receipts and invoices organized. In my next blog, I will look at some apps to help even more.

Have a designated place for receipts and invoices

Many organizers recommend that you have three designated receptacles, such as trays, baskets, or folders, in which you put important papers until you have time to deal with them. One tray would be for bills that need to be paid, one for completed work that needs to be invoiced, and the third for documents to be filed. As soon as documents are received, whether through the mail or delivered in person, they should be reviewed for correctness and then placed in the appropriate repository until you are ready to pay bills or send out invoices. Upon dealing with these items, the supporting documents should be put in the “file” tray until you have time to file them.

Set up online folders to store receipts and invoices that are sent digitally

Many of your suppliers will send you invoices via email or text that allow you to simply enter your payment information. Save these receipts in digital files. To eliminate the need to keep paper receipts, you can scan them and add them to your digital file system. Scan apps for phones can make this an easy process. As an alternative to scanning, you can snap a picture of your receipts and store the pictures. Scanning receipts also helps to protect their legibility, so you can read them clearly in the future.

Setup Auto-Pay for Regularly Occurring Bills

Most banks make it easy to set up automatic payments for regularly occurring bills. Some companies, such as utility companies, will send the bill to the bank. You should down load the bill for your records, however, as the bank may not store the bill long-term. Banks must store payment records for several years, but they are not required to store invoices. Make it a habit to download the bill at the time you authorize payment. Store the invoices in the digital files you have created on your computer.

Schedule Time Regularly for Bill Paying and Invoicing

Set aside time each week, or more often, to pay bills and send out invoices. It is important to put this on your calendar and commit to keeping up with these tasks. Scheduling time on your calendar helps you to build habits that ensure that your bills get paid, your invoices get sent out, and your records are kept up-to-date. In the long run, this habit will save you money and reduce your stress.

Match your receipts with your bank and credit card transactions.

Include time in your bill management schedule to review each bank statement and credit card statement. Match each transaction with your receipts. If you are missing a receipt, the earlier you realize this the sooner you can search for it and the more likely you will be to find it. Keep in mind that if you should face an audit, the IRS will not accept credit card statements. You must be able to produce legible receipts for each expense you deducted on your tax return.

All your business documents should be kept for at least seven years after you have filed your tax return. You should also set up backup storage, in case you have a problem with your computer. You can store your files on an external hard drive or in the cloud.

Follow the steps above to organize your receipts and invoices. It will reduce your stress and save you money on your taxes. Watch for my next blog on apps to make these processes even easier.

Tax Season Starts Now: How to Prepare Without Stress

The third week of January is the ideal time to begin preparing for tax season. A little organization now can make tax preparation far less stressful later. The tips below will help you gather what you need, stay organized, and approach tax time with confidence.

Personal Tax Returns

Collect documents as they arrive.
Some tax-related documents are issued at the time a payment is made rather than at year-end. For example, in my state, property tax bills are due in June and December, and the bill itself serves as the tax receipt—no additional documentation is sent. That makes it essential to file those receipts in a place where they can be easily found at tax time.

I place property tax receipts and one-time charitable donation receipts into a large manila envelope as they come in. If you haven’t already done this, take some time now to review your files and locate the documents you’ll need.

Review checkbook registers for deductible expenses.
When I begin preparing my tax information for my accountant, I review my checkbook register for:

Charitable donations for which I may not have receipts
Medical expenses that may be deductible
Payments made to my tax preparer for the previous year

This step often uncovers deductions that might otherwise be missed.

Watch the mail.
Employers, banks, the Social Security Administration, financial institutions, state governments, and nonprofits are required to provide W-2s and 1099s by the end of January. Be on the lookout for envelopes labeled “Tax Documents.”

Designate one place for these forms to avoid misplacing them and wasting time later. I add them to my manila envelope with other tax-related paperwork, but a desk tray, basket, or designated folder works just as well.

Create a digital file for downloaded tax documents.
Some organizations send tax documents electronically rather than by mail. Download these forms and save them in a clearly labeled folder on your computer so everything is in one place.

Prepare a summary sheet for your tax preparer.
Your accountant does not need every individual receipt. Instead, summarize deductible expenses in categories. For medical expenses, total costs by category such as doctor visits, dental care, prescriptions, and vision expenses.

For charitable contributions, list each organization, the total amount donated, and the organization’s mailing address. I also like to summarize W-2 and 1099 income on a single sheet, even though I provide the official documents as well.

Small Business Owners

Prepare and send required tax documents.
If you paid employees or contractors in 2025, now is the time to prepare required forms. W-2s must be delivered to employees by the end of January, and 1099s must be sent to independent contractors paid $600 or more.

If you use a payroll service, they will typically prepare and distribute W-2s either by mail or through a secure online portal.

Watch the mail for incoming business tax forms.
You should expect to receive 1099s from companies your business worked for, as well as forms related to interest, dividends, online sales platforms, and business loan or mortgage interest.

Organize deductible business expenses.
If you use accounting software, organizing deductible expenses should be straightforward, as most business expenses are deductible. When I owned my restaurant, I printed a summary expense report for my accountant—he did not need to review individual transactions.

Reasons to Prepare Early

Most people don’t enjoy tax preparation, but completing these tasks early in the year offers clear advantages.

Reduced stress.
Gathering documents as they arrive and storing them in one secure location prevents last-minute scrambling and reduces anxiety. Everything is ready when it’s time to file or meet with your accountant.

Faster refunds—or more time to plan payments.
Filing early means refunds arrive sooner. If you owe taxes, early preparation gives you time to plan, save, or make payment arrangements.

Fewer errors.
Providing documents to your accountant early allows them to work on your return before peak season. With fewer time pressures, your accountant can review details carefully and confirm information with you.

Opportunities for last-minute tax strategies.
Early in the season, accountants have time to recommend strategies that may reduce your tax burden or increase your refund, such as retirement contributions. You can also adjust your tax planning strategies for the year ahead.

Taking time to prepare for taxes in January saves stress and time as the year becomes busier. Do yourself a favor and begin organizing as soon as your first tax document arrives—whether by mail or email. A little effort now can make tax season far more manageable.

Start the New-Year with an Inventory: A Practical Guide for Small Businesses

The start of a new year is the perfect time for small business owners to pause, reflect, and prepare for what lies ahead. As you close the books on 2025, one essential step in setting your business up for success is taking inventory.

For many businesses, inventory is a mandatory task. You must know what assets you have in order to (1) determine your cost of goods sold, (2) calculate profit and loss, and (3) prepare an accurate balance sheet. This process often requires the business owner—or trusted staff members—to physically count inventory.

Retail and wholesale businesses must count goods held for sale, while manufacturers must account for components and materials. Beyond physical assets, wise business owners take inventory in several other critical areas that support long-term business growth.

Personnel Inventory

The new year is an ideal time to assess your workforce and determine whether you have the right people in place to meet upcoming challenges.

Consider whether you plan to expand into new markets and whether your current team has the skills needed to support that growth. If you anticipate changes to operations due to new technology or the use of AI, ask whether current employees will need additional training—or whether new roles with different skill sets may be required.

Think ahead to employee transitions. If key team members may retire or leave this year, identify whether current employees could be developed and promoted into those roles, and which positions may require external hiring. Review certifications and training credentials, and create a plan for continuing education or re-certification where needed. Investing in your people is one of the most important investments you can make as a small business owner.

Digital Inventory

Your digital assets are valuable business resources and should be reviewed regularly. These assets include customer lists, business documents, websites, photos, videos, and social media accounts.

Ensure that all digital assets are secure, backed up, and compliant with applicable regulations. Public-facing assets such as your website should be ADA compliant so that all potential customers can access your information and interact with your business. Review license and subscription renewal dates and add them to your calendar to avoid disruptions.

Document who has access to digital accounts and what permissions they hold. At least two trusted employees should have access to critical systems to ensure continuity if an account manager leaves unexpectedly.

Financial Inventory

A financial review is essential to maintaining a healthy small business. Take time to examine outstanding accounts receivable—money owed to your business—and accounts payable—money your business owes.

Confirm that obligations are being paid on time to avoid late fees and interest and to take advantage of any early-payment discounts. Evaluate whether customers are paying on schedule and address overdue accounts promptly. Review your cash position to ensure you have sufficient funds to meet upcoming obligations. If a shortfall is likely, act early to establish a line of credit or strengthen your receivables collection process.

Intellectual Property Inventory

When small business owners hear the term intellectual property, they often think of patents or trademarks. While you may not hold formal registrations, you likely have important branding assets such as your business name, logo, website, and domain names.

Take time to confirm that these assets are protected and that any registrations or renewals are current. Review your business listings across online directories to ensure information is accurate and consistent. Conduct an internet search to verify that no one is improperly using your business name or branding. Protecting your intellectual property helps safeguard your reputation and credibility.

Marketing Inventory

Review your marketing materials, including brochures, business cards, and branded merchandise. If inventory is running low, this is an excellent time to evaluate whether updates or corrections are needed.

Order refreshed materials as appropriate, and discard outdated versions to reduce clutter and prevent employees from inadvertently using incorrect information. Clear, current marketing materials support consistent messaging and professional presentation.

Processes Inventory

Finally, assess your business processes to ensure your operations are efficient and aligned with your goals. Reviewing processes can uncover gaps, inefficiencies, and opportunities for improvement.

Evaluate core operational workflows, administrative tasks, inventory management, sales and marketing efforts, customer service procedures, technology systems, and decision-making processes. As you do, consider whether new tools or technologies on the market could improve efficiency or support future growth.

Taking these inventories requires an investment of time, but the benefits are significant. This process helps prepare your employees for the year ahead, simplifies tax preparation, protects your business assets, reduces clutter, and positions your company for success in 2026.

A thoughtful inventory is one of the best ways to start the new year with clarity, confidence, and purpose. It is time well spent—and a strong foundation for the year ahead.

To make this easy to use throughout the year, the checklist below can be copied and pasted into your Notes app, or you can email it to yourself using the icon at the bottom of this post.

New Year Small Business Inventory Checklist

Save this checklist to revisit throughout the year.

📦 Physical & Asset Inventory

☐ Count inventory held for sale (retail/wholesale)
☐ Count components and materials (manufacturing)
☐ Review furniture, fixtures, and equipment
☐ Update depreciated values for tax and accounting records
☐ Check office supply levels

👥 Personnel Inventory

☐ Review current staffing levels
☐ Identify skill gaps for business growth or expansion
☐ Assess training needs related to technology or AI
☐ Review employee certifications and renewal dates
☐ Identify potential retirements or role transitions
☐ Create a hiring or promotion plan if needed

💻 Digital Asset Inventory

☐ Review customer lists and business documents
☐ Confirm website and digital assets are backed up
☐ Check ADA compliance for public-facing platforms
☐ Review software licenses and subscription renewals
☐ Confirm who has access to each digital account
☐ Ensure at least two trusted users can access critical systems

💰 Financial Inventory

☐ Review accounts receivable
☐ Follow up on overdue customer payments
☐ Review accounts payable
☐ Schedule upcoming payments to avoid late fees
☐ Review cash flow and upcoming obligations
☐ Explore financing or credit options if needed

™️ Intellectual Property Inventory

☐ Review business name, logo, and branding assets
☐ Confirm domain names and renewals
☐ Check trademarks or copyrights (if applicable)
☐ Verify business listings across online directories
☐ Search for unauthorized use of business branding

📣 Marketing Inventory

☐ Count brochures, business cards, and printed materials
☐ Review messaging for accuracy and relevance
☐ Update marketing materials as needed
☐ Reorder materials with low stock
☐ Discard outdated or incorrect materials

⚙️ Process Inventory

☐ Review core operational processes
☐ Assess administrative workflows
☐ Evaluate inventory management systems
☐ Review sales and marketing processes
☐ Assess customer service procedures
☐ Evaluate technology and data management tools
☐ Identify inefficiencies and improvement opportunities

Is Your Business Healthy? Let the Numbers Tell the Story

Over the past few weeks, we’ve discussed how to create and understand your financial statements. Now it’s time to turn our attention to reviewing and assessing those statements.

Regularly analyzing your financial data is essential to:

Determine if your business plans are working
Identify problems such as theft or fraud
Evaluate how your business compares to others in your industry
Spot trends that may positively or negatively affect your revenue

Are Your Plans Working?

Your cash flow worksheet was based on projected monthly sales over two years. You made critical business decisions—such as hiring staff, leasing space, and applying for financing—based on those projections.

If your actual revenue is falling short of projections, you may be burning through cash faster than expected. Identifying that early allows you to make adjustments, cut expenses, or secure additional funding.

On the flip side, if your revenue is exceeding expectations, you might be struggling to meet demand or maintain excellent customer service. In that case, you may need to hire more staff or set clearer expectations with customers regarding delivery times.

Identifying Problems

When I owned a restaurant, we were required to complete a weekly profit and loss statement and submit it to headquarters along with our royalty payment. Two numbers I always paid close attention to were payroll and cost of goods sold (COGS).

Our goal was to keep payroll under 22% of revenue and COGS under 35%. If either number was too high, it triggered an investigation. Here are some examples:

Payroll Red Flags

Overstaffing during slow periods: I reviewed scheduling during off-peak hours and made necessary adjustments.
Employees clocking in early or out late: I compared timecards to the schedule. One student used to come in early to do homework, but I didn’t realize he was on the clock!
Overtime pay: This often happened when a nearly full-time employee picked up extra shifts. We learned to ask part-time staff to cover instead.

Inventory Red Flags

Improper food preparation: Mistakes led to waste. We retrained employees or reminded them to follow special instructions more carefully.
Excess food on the buffet: Supervisors learned to reduce what was put out in the last 30 minutes of service.
Ordering errors: Overstocked perishables spoiled; running out meant buying from local stores at higher prices.
Theft: This included employees eating food without paying, giving away food, or failing to ring up sales and pocketing the cash.

Even if you’re not in the food service business, these examples illustrate how to track down the causes of higher-than-expected costs.

Comparing to Industry Standards

Analyzing your financial statements also helps you understand how your business stacks up against others in your industry. Industry benchmarks are available through association data, IBISWorld reports, and other sources.

For more on this, check out my blog: Comparing Your Financial Ratios to Industry Standards – Susan’s Reflections

Spotting Financial Trends That Spell Trouble

Declining sales volume is a major red flag. A brief dip might be seasonal or due to temporary competition. But if the trend continues, take a closer look:

Customer service issues: Even one rude or careless employee can cost you business. Many customers won’t complain—they’ll just leave.
Product quality issues: Poor-quality goods can lead to returns and dissatisfied customers.
Missed deadlines: Late deliveries frustrate clients. Evaluate every step in your supply chain to find and fix delays.

Rising accounts receivable can signal that your customers are struggling to pay. This slows your collections, reduces cash flow, and makes it harder to pay your own suppliers. If your receivables are growing:

Identify which customers are paying late and ask why.
Consider adjusting their credit limits or payment terms.
Project your cash flow for the next few months.
Talk to your banker about a line of credit, and ask suppliers for more favorable terms if needed.

Declining profit margins are another warning sign. Investigate the root cause. It could be:

Rising supply costs: Due to inflation, fuel prices, or shortages. Consider discontinuing low-margin items or sourcing more affordable alternatives.
Increased wages: If labor costs have risen, look for ways to improve productivity or automate processes.
Higher operating expenses: These might include utilities, insurance, or telecom services. Shop around for better rates, reduce waste (like leaking pipes or lights left on), and review whether you’re paying for services you don’t need.

Final Thoughts

Every business is different, but all must control costs and protect profit margins. Assessing your financial ratios regularly helps you identify problems early—before they impact your bottom line. Use the examples above as a guide to evaluate your own financials, make informed decisions, and position your business for long-term success.

If you’d like help reviewing your financial statements or identifying potential issues, don’t hesitate to reach out. I’m here to support you! You can email me at susan.ball5@aol.com.

Know Your Financial Statements—Accounts Payable

Most small businesses have a number of unpaid bills at any given time. Inventory has been delivered, but the invoice isn’t due yet. Utility bills arrive two to three weeks before the due date. Retail sales tax has been collected but not remitted to the tax department. Payroll withholding taxes are being held in escrow until it’s time to file quarterly reports. These unpaid bills are known as accounts payable.

It’s crucial to keep track of your accounts payable so you know how much is owed, to whom, and when the bills are due. Managing your accounts payable effectively offers several benefits. A statement of accounts payable will help you achieve this.

Benefits of a Statement of Accounts Payable

Effective Cash Flow Management
Accounts payable should be included in your cash flow statement for the month they are due. This ensures that you’ll have enough cash on hand to cover those bills. It also helps highlight months where a shortage might occur, allowing you to arrange a line of credit to meet forecasted shortfalls.
Avoidance of Late Fees and Interest
Tax authorities impose penalties for late filing of quarterly tax payments and monthly sales tax reports. Banks, utility companies, and suppliers may also charge late fees or interest for bills that aren’t paid on time.
Take Advantage of Discounts
Many suppliers offer discounts for early payment. A statement of accounts payable lets you easily spot vendors offering discounts, so you can ensure bills are paid on time to take advantage of these savings.
Maintain Good Credit and Vendor Relationships
Timely payments are key to maintaining a strong credit score and healthy relationships with lenders and suppliers.
Preparation for Loan Requests
If you need to borrow money or establish a line of credit, lenders will often request a statement of accounts payable. This statement helps them evaluate your level of debt in relation to industry norms and your ability to cover outstanding debts if your revenue declines.

Creating a Statement of Accounts Payable

A statement of accounts payable is essentially a table that includes:

Name of creditor
Account number or invoice number
Invoice date
Due date
Amount owed

Creditor	Acct/Invoice Number	Invoice Date	Due Date	Amount
Bill 1
Bill 2
Bill 3
Bill 4

Tips for Managing Accounts Payable

Managing accounts payable effectively is crucial for maintaining healthy cash flow and good vendor relationships. Here are some best practices to consider:

Separate Regular and Occasional Bills
Keep distinct charts for bills that occur regularly and those that are occasional. This makes it easier to track and manage.
Record Monthly Bills on Your Cash Flow Statement
Include occasional bills in the months they are due, not just the regular ones. This will help you get a clear picture of your upcoming cash flow needs.
Set Up Automatic Payments for Fixed Monthly Bills
Set up automatic payments for bills like rent, loan payments, cell phone bills, and subscriptions that are predictable and have a fixed amount.
Estimate and Adjust for Variable Bills
For bills that vary, like utilities or discretionary expenses (marketing, for example), use an estimated amount in your cash flow statement and adjust for seasonal variations.
Automate Bill Payments When Possible
If possible, have bills go directly to your bank. This simplifies the payment process, especially if you’re using a bill-paying app.
Track Infrequent Bills
For less frequent bills, like insurance payments, set up automatic payments to ensure you don’t overlook them.
Balance Your Checkbook Regularly
Schedule weekly or bi-monthly checkups to balance your checkbook and confirm that all bills have been paid or are scheduled for timely payment.
Forecast Cash Flow in Advance
Predict your monthly cash balances several months in advance to determine if sufficient funds will be available during slower months. If you forecast a shortage, take steps to ensure enough cash is available, like establishing a line of credit or injecting more capital into the business.

Conclusion

A statement of accounts payable is a simple but powerful tool for tracking your bills and maintaining healthy cash flow. By following the tips above, you’ll be able to manage your accounts payable effectively, avoid late fees, and maintain good credit and vendor relationships.

If you have any questions about managing your accounts payable or tips for creating your own statement, feel free to drop them in the comments below. I’d love to help you better understand this important aspect of your business finances!

Know Your Financial Statements—Accounts Receivable

If your business extends credit to customers, understanding and managing accounts receivable is essential. Accounts Receivable (AR) refers to the money customers owe for services rendered or goods delivered, and it’s a critical part of your cash flow. Many businesses—like professional services, utility companies, and wholesalers—work with accounts receivable.

What Are Accounts Receivable?

When you extend credit, you’re essentially allowing your customers to pay later, often within a specified number of days. For example, if you deliver goods or services to a customer, you may allow them 30 days to pay the bill. In this case, you would have an account receivable until that payment is made.

To effectively track AR, businesses use an aging schedule, which categorizes accounts based on how long the payment is overdue. At the end of this blog, I’ve provided a helpful Accounts Receivable Aging Schedule Template. This template outlines what to include in your report, but if you prefer to create your own, it offers a great starting point to ensure you’re tracking the necessary information. Typical categories are:

Current (not yet due)
1-30 days past due
31-60 days past due
61-90 days past due
Over 90 days past due

Why Does This Matter?

An Accounts Receivable Aging Report plays a significant role when you apply for a business loan. Lenders will review this report to assess how much of your business’s sales are made on credit, how it compares to industry norms, and whether there’s a risk of non-collection. Specifically, lenders are concerned about the percentage of receivables that are more than 60 days overdue. If the report shows high delinquency, it could signal poor cash flow management, which might lead to a loan denial.

Why Managing Accounts Receivable is Crucial

Effective AR management is key to your business’s cash flow health. Here are a few strategies to keep in mind:

Measure the Effectiveness of Discounts
Many businesses offer early payment discounts, like “2/10 Net 30,” meaning a customer gets a 2% discount if they pay within 10 days, but the full amount is due in 30 days. If a lot of customers are taking advantage of the discount, cash comes in quicker—but your profit margin takes a hit. Understanding how well your discount terms are working can help balance cash flow with profitability.
Monitor Customer Behavior
Let’s say you’ve had a loyal customer who consistently pays early for the discount, but now they’re paying late or just on time. This could be a sign that they’re experiencing cash flow problems. If so, it’s worth reaching out to see how you can help. Perhaps they need smaller orders, or you can work out a payment plan to keep the relationship strong and reduce your risk of uncollected debt.
Improve Cash Flow Management
By closely tracking overdue invoices, you can promptly follow up with reminders. If certain customers consistently pay late, it might be necessary to put a hold on further orders until they clear their outstanding balance. Proactively managing receivables ensures that cash keeps flowing into your business and reduces the risk of uncollected debt.
Assess and Adjust Credit Terms
If few customers are taking advantage of your early payment discount, it could be time to reassess your credit policy. Maybe your discount isn’t big enough to incentivize early payment. Or perhaps customers need more time to pay based on how quickly they can sell your product. Adjusting your credit terms might help accelerate cash flow without compromising customer relationships.

The Risk and Reward of Extending Credit

Offering credit is an excellent way to attract new customers and keep current ones loyal. A discount for early payment can boost cash flow and reduce the risk of bad debt. But, as with all things in business, extending credit comes with its risks—delayed payments can affect cash flow, and offering discounts reduces profit margins. It’s important to stay informed about industry standards, track your AR regularly, and adjust your policies as needed. Most accounting software has monitoring features that can make this process easier.

Here’s a template for an Accounts Receivable Aging Schedule:

Final Thoughts

Tracking accounts receivable is more than just a financial task—it’s a critical element in your business’s cash flow management. By understanding how to monitor, manage, and adjust credit policies, you can strengthen your business’s financial health and make sure cash continues to flow in the right direction.

How Small Businesses Can Thrive in 2025: Focus on Profits, Not Just Growth

As a small business owner, you’ve probably heard that the key to success is always growing your sales. You may focus on acquiring new customers, retaining current ones, and increasing customer spending. While these strategies can drive growth, they often come with higher costs—more marketing, more inventory, and more staff to support a larger customer base.

However, after years of rising costs and increased minimum wages, many small businesses have seen their profits shrink rather than grow. If this sounds familiar, then 2025 might be the year you shift your focus from growth to profitability.

Now is the perfect time to review your finances and make changes that can boost your bottom line without having to push for more sales. Here are some actionable strategies to help you increase profits and run a more efficient, sustainable business.

1. Reevaluate Your Prices

In the wake of inflation, many small businesses have hesitated to raise prices, fearing they might lose customers. But with inflation slowing and consumer confidence growing, it might be time to revisit your pricing strategy. Consider whether your prices are truly covering your costs and generating the profit you need.

Don’t be afraid to adjust prices where necessary to reflect rising operational costs. Just be sure to communicate any changes clearly to customers and justify them with the value you provide.

2. Cut Unnecessary Expenses

It’s easy for costs to accumulate over time, especially with subscriptions, memberships, and services that no longer serve you. Take a hard look at your expenses and identify areas to cut back.

Subscriptions & Memberships: Do you still use all the tools and services you’re paying for? If not, cancel or downgrade them.
Automation & Outsourcing: Could you automate repetitive tasks or outsource certain functions? This could reduce labor costs while increasing efficiency.
Supplier Negotiations: Talk to your suppliers about negotiating better rates, especially if you’ve been a loyal customer. Every little saving adds up.

3. Deliver Exceptional Customer Service

It’s cheaper to retain a customer than to acquire a new one, so it’s essential to focus on the customers you already have. Excellent customer service builds loyalty, encourages repeat business, and leads to referrals.

Be proactive in ensuring that your current customers have an outstanding experience every time they interact with your business. From personalized service to prompt responses, make sure they know you value their support.

4. Focus on Your Best Customers (80/20 Rule)

The 80/20 rule is a powerful principle for many aspects of business—and that includes your customers. It’s likely that 80% of your profits come from just 20% of your customers. By identifying and nurturing these top customers, you can maximize your profits without spending extra time or money.

Use CRM tools or loyalty programs to track customer spending and reward your best clients with exclusive offers, early access to new products, or VIP treatment.

5. Optimize Payment Methods to Save on Fees

Review the payment options you accept. For instance, payment processors often charge hefty fees for credit card transactions. Could you save money by offering lower-cost alternatives like direct debits, Venmo, Zelle, or other digital wallets? If you’re using a traditional POS system, it might be worth investigating newer platforms with lower processing fees.

6. Rethink Your Marketing Strategy

Marketing is a necessary expense, but that doesn’t mean it has to drain your budget. Take a closer look at where your marketing dollars are going:

Social Media: Could you achieve similar results using free or low-cost social media platforms rather than expensive ads?
Negotiation: If you’re using traditional advertising (like print or TV), see if you can negotiate lower rates or more favorable terms.
Marketing Tools: Are you paying for marketing tools that aren’t delivering a good return on investment? It might be time to test new, more cost-effective options.

7. Optimize Inventory Management

Managing inventory efficiently is crucial for profitability, especially for small businesses. Overstocking means tying up cash in products that might not sell, while understocking leads to missed sales opportunities.

Consider:

Just-in-Time Inventory: Order only what you need, and aim for timely deliveries to avoid waste, spoilage, or excessive storage costs.
AI & Apps: Use AI-driven tools or inventory management software to track and predict demand so you don’t overbuy or underbuy.
Clearance or Donations: If inventory isn’t moving, consider offering discounts or donating items to free up space and improve cash flow.

8. Manage Payroll Efficiently

Staffing is one of the largest expenses for many small businesses. Review your past sales data to anticipate the staffing levels you need for peak and off-peak times.

Cross-training employees can help them stay productive during slow hours, and ensuring you’re not overstaffed can help save on payroll costs. Empower your employees to take on multiple roles to improve efficiency and reduce the need for extra hires.

Start Focusing on Profitability Today!

By taking these steps, you can position your business for a more profitable year ahead, even if your sales growth slows. Profitability is not just about increasing revenue—it’s about managing expenses, optimizing processes, and building stronger relationships with your existing customers.

Ready to start boosting your profits in 2025? Take a look at your current strategies, make the necessary changes, and watch your business become more profitable than ever.

Small Business Saturday: How Supporting Local Shops Makes a Big Difference

As we celebrate Thanksgiving, let’s take a moment to appreciate the heart of our communities—small businesses. On Small Business Saturday, and throughout the holiday season, it’s important to recognize the significant role small businesses play in shaping our local economies and supporting community growth.

Small Businesses: The Backbone of the Economy

With over 34.8 million small businesses in the U.S. employing nearly 59 million people, small businesses make up 99.9% of all businesses and account for almost 46% of all jobs. While many small businesses are owned and operated by just one or two people, their economic impact cannot be overstated. Some of today’s small businesses will grow into large employers in the future, further strengthening the economy.

How Small Businesses Strengthen Local Communities

Small businesses are not just job creators; they are vital to the social and economic fabric of their communities. Here’s how:

Money stays in the local economy: When you spend money at a small business, it stays within your community. The business owner and employees spend that money locally, creating a ripple effect of local job creation and economic activity.
Ability to meet the unique needs of their community: Small business owners have the flexibility to pivot quickly and meet the specific needs of their customers. Without the need for top-down approval, they can respond swiftly to new opportunities, ensuring their businesses are relevant and adaptable.
Creates a community identity: Many small businesses have been a cornerstone of their communities for decades. For example, one of the best-known small businesses in our area is about to celebrate its 100th anniversary! These businesses become synonymous with local identity, embodying the history and culture of the area.
Involvement in local civic life: Small business owners often participate in community organizations like the Chamber of Commerce, Rotary clubs, and local initiatives. This active involvement helps address local challenges while creating a sense of shared purpose in the community.
Innovation and supporting other small businesses: A local restaurant might source ingredients from nearby farms, or a boutique could sell locally made products. Small businesses frequently collaborate with each other, creating unique shopping experiences and boosting one another’s success.

Show Your Appreciation on Small Business Saturday

As we reflect on the many blessings we have this Thanksgiving, I encourage you to show your gratitude by supporting small businesses this holiday season, especially on Small Business Saturday. Visit local shops, dine at locally owned restaurants, and think about allocating some of your Christmas shopping budget to support your favorite small businesses. When you shop local, you’re investing directly in the future of your community.

If you’ve heard about any small business owners giving back to the community or supporting charitable causes, take a moment to recognize their contributions. A simple “thank you” can go a long way.

A Special Note to Small Business Owners

If you’re a small business owner, remember to be grateful for your customers—they don’t have to shop with you, they choose to. Showing appreciation can take many forms, from offering special perks like gift wrapping or loyalty programs, to simply offering a friendly smile or a kind word. It’s a great time to strengthen the relationship with your customers and show them you value their support.

The Power of Kind Words

In this busy season, both customers and business owners can benefit from a kind word of thanks. After all, as the old saying goes: “Kind words are like honey—sweet to the soul and healthy for the body.” (Proverbs 16:24)

Happy Thanksgiving and Happy Small Business Saturday!

May you experience joy and blessings this season, and may your small business continue to thrive in the coming year!

Checklist for Starting Your Business

Starting a small business can be both exciting and overwhelming. To help guide you through the process, I’ve created a comprehensive checklist covering key steps you need to take before launching your venture.

Before you start your business:

Define Your Business Concept.
a. What products or services will you offer?
b. What business name will you use?
Evaluate Your Business Potential.
a. Estimate monthly revenues
b. Estimate monthly expenses
c. Determine if your business can operate profitably based on revenues and expenses.
Develop Your Business Plan. This may involve writing a formal business plan, or it may involve creating informal lists. Your plan should include:
a. Mission, Vision, and Values
b. Target Customers
c. Marketing Ideas
d. Operational Plan
e. Job Descriptions
f. Pricing Structure
g. Customer Policies
h. Competition Analysis
Choose Your Business Location
a. Will your business be home-based or in a commercial space?
i. If commercial, how much space do you need?
ii. Will you lease space or purchase a space?
iii. Identify the desired space and sign an intent-to-lease agreement. Please make sure you secure ALL necessary financing before signing the lease agreement.
Estimate your start-up costs.
a. Consider the following expenses:
i. Equipment, furnishings, and fixtures
ii. Lease space build-out
iii. Lease and utility deposits
iv. Inventory
v. Insurance deposit
vi. Website and marketing
vii. Legal and professional fees
Determine your financing needs,
a. Total start-up costs minus your personal investment in the business. Then, you should plan to inject 20% or more of that amount into the business.
b. Arrange for your financing needs from investors or lenders.
i. Investors will typically receive some ownership in the business.
ii. Start-up loans require monthly debt repayment, typically for 3 – 7 years, at a rate of interest a few points higher than the prime interest rate.
Licensing and Registration Requirements:
Register your business with your state’s corporation commission.
a. Registering your business gives you exclusive rights to use your business name in the state.
b. Business registration is required for the state in which you will operate.
c. Some business owners register their business in state’s with no state income tax. However, this is generally not a wise idea, as you will still have to register in the state where you operate the business.
d. Remember that you must pay income tax in the state where the income is earned.
Obtain a tax iID number for your business through the IRS portal.
File an initial beneficial ownership information report with the U.S. Treasury’s Financial Crimes Enforcement Network at fincen.gov/boi
Write an operating agreement for your business. This establishes ownership.
Open a business bank account. It is essential to keep business income separate from personal income.
Complete local requirements for your community, including obtaining a business license and zoning permit.
If you will sell retail products, you must register with your state’s Department of Taxation to collect and remit retail sales taxes.
a. Creating a sales tax account obligates the owner to file regular sales tax reports.
b. A sales tax account will allow the owner to purchase items for resale tax-free and, likely, at wholesale prices.
c. If you sell exclusively online through a Marketplace Facilitator, such as Etsy or Amazon, they will collect and remit the sales tax for you. You may still need to create an account in order to make wholesale purchases.

Conclusion

Starting a small business is a significant but rewarding journey, and having a clear, organized plan is essential for success. Use this checklist as a practical tool to guide you through each crucial step of the process, from defining your business concept to meeting licensing requirements. By following this checklist, you can ensure that you cover all your bases and set yourself up for a successful launch.

Please print out this checklist and keep it handy as you embark on your business journey. It will be a valuable reference to help you stay on track and manage your tasks effectively.

Get in Touch!

Do you have questions or need further clarification on any of the steps? I’d love to hear from you! Feel free to leave your questions or comments below. Whether you’re looking for more detailed advice or just need some encouragement, I’m here to support you in your small business venture. Don’t hesitate to reach out—your path to success is just a conversation away!

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