How To Stop Playing Whack-A-Mole With Your Business Checking Account

Paying bounced check fees and never knowing what’s going to clear the bank account each day robs you of any cash flow management strategies you try to implement. If managing your business bank account feels like a game of Whack-A-Mole, use these tips take back control.

First some tough love: Before you can implement the tips below, the first thing you may need to change is the mindset that you are too busy or too important to manage your own bank account. If something in your business is out of control, it should immediately become your problem and responsibility. Once you get it back into control and set policies and procedures in place to keep it in control, you can once again delegate bank account management to your bookkeeper or office manager.

  1. Start keeping a check register and update it daily. The format doesn’t matter. The fact that you update it daily is crucial.
    • Ideas for a check register are
      • Accounting software such as QuickBooks
      • Notebook paper
      • Business check register or check stubs that come with your business checks
      • Excel or Google Sheets
    • Info you need to keep in the register
      • Date you wrote the check or date the transaction (automatic debits and deposits) will hit the account
      • Payee or customer name; if it’s credit card receipts use “CC Deposits”
      • Amount of transaction
      • Running balance of account
  2. Balance the bank statement each month.
  3. If you have a bookkeeper familiar with your finances and banking, ask him or her for ideas on how to get things back on track. Oftentimes, employees close to the situation have a better understanding of issues.
  4. Cancel as many automatic debits as possible such as utility payments, cell phone bills, insurance premiums, credit card payments, etc. Have these bills mailed to you and put them in your accounts payable system. You can add these automatic debits back to the account, one at a time, as you obtain more control of the bank account. You may also find that you prefer to minimize automatic debits as a policy moving forward.
  5. Keep in mind that although automatic debits may save bill-paying time, they also serve to minimize your control of monies leaving the bank account.
  6. If some payments must be on automatic debit, make a list of these payments including the amounts and the dates they debit the account. Then once per month, enter all of these automatic debits into your check register so you can plan for them.
  7. Cancel overdraft protection where the bank agrees to cover your account when it’s overdrawn. These fees are often just as much, or more, than an NSF fee when the item is returned. This service also invites you to be less diligent.
  8. If you have a savings account at the same bank that is used to cover overdrafts in your operating account, close the savings account and move it to another bank. You want to remove anything that invites you to not pay attention to the bank account balance.
  9. Log into online banking every morning after the bank has posted yesterday’s transactions and today’s processing transactions. Usually this is around 6 am for most banks. This gives you the opportunity to cover any processing transactions that will overdraw your account. Most likely, you won’t be charged an overdraft fee if you cover processing transactions on the same day. You may have to get cash out of your savings account and deposit it to your operating account so you can get immediate credit.
  10. Do not release any checks you write until you have entered them in your check register and see that you have enough funds to cover them.
  11. Stop employees from using debit cards. Open up a credit card account if employees need to make purchases for the business.
  12. Set up a separate bank account for payroll if you are struggling to fund it. Make weekly or daily transfers from your operating account to the payroll account so you have sufficient funds for pay day.
  13. Get your hands out of the cookie jar. If you are raiding the operating bank account for personal funds, put yourself on a payment schedule or on payroll.

It is possible to get control of the bank account and eliminate overdrafts. Overdraft fees are an extremely expensive way to finance operations. You are better off getting a loan or putting expenses on a credit card. Take it one day at a time, and you can get back on track. You got this!

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