subject: How Many Accounts Does Your Spa Need? [print this page] When it comes to making payments and tracking cash, checks, credit cards and gift cards, do you ever find yourself not being sure if you have the balance you need to cover an online payment, even though you know you made more than enough money that month? The problem is that your customers pay many different ways: Some with cash which clears immediately; some with checks which can take several days to clear; and some with credit cards which can take anywhere from 24 hours to four days to be deposited into your account, depending upon the type of card used. You need a reliable and proven method to ensure that your payments and payroll are covered without having to spend valuable time constantly accounting for every dollar. The Three Account System First, remember that even if you cleared a couple thousand dollars today, it isn't all in the bank tonight or even tomorrow. If you use a single account to deposit all payments and make all payments, you can never reconcile the balance on the account because constantly, every day, there are payments coming in and going out from a number of sources. The simple solution is to open three accounts a system which will ensure that all payments are covered, and that you can know immediately what your balance is at any time. The Deposit Account. The first account you need is the Deposit Account. This is like the account you have now where all revenues flow into the account. The difference is that you never write checks or make individual payments to vendors from the Deposit Account. The Operating Account. The second account you will use to write all checks and make all payments to vendors, utilities such as phone, internet, electricity, etc. The only thing you won't pay from this account is payroll. The Payroll Account. Which brings us to the Payroll Account. The only things you will pay from this account are payroll and payroll related expenses (taxes, etc.)
The problem is that your customers pay many different ways: Some with cash - which clears immediately; some with checks - which can take several days to clear; and some with credit cards - which can take anywhere from 24 hours to four days to be deposited into your account, depending upon the type of card used. You need a reliable and proven method to ensure that your payments and payroll are covered without having to spend valuable time constantly accounting for every dollar.
*The Three Account System. First, remember that even if you cleared a couple thousand dollars today, it isn't all in the bank tonight - or even tomorrow. If you use a single account to deposit all payments and make all payments, you can never reconcile the balance on the account because constantly, every day, there are payments coming in and going out from a number of sources.
The simple solution is to open three accounts - a system which will ensure that all payments are covered, and that you can know immediately what your balance is at any time.
*The Deposit Account. The first account you need is the Deposit Account. This is like the account you have now where all revenues flow into the account. The difference is that you never write checks or make individual payments to vendors from the Deposit Account.
*The Operating Account. The second account you will use to write all checks and make all payments to vendors, utilities such as phone, internet, electricity, etc. The only thing you won't pay from this account is payroll.
*The Payroll Account. Which brings us to the Payroll Account. The only things you will pay from this account are payroll and payroll related expenses (taxes, etc.)
*How the Three Accounts Work Together. The Deposit Account collects all payments from all sources - cash, checks, credit and debit cards. The balance the bank shows in your Deposit Account is actually money in the bank that you can use.
After using your salon software or online account to make payments using the Operating Account, transfer the total from the Deposit to the Operating Account and everything is covered.
The Payroll account works the same way. Once you've written all your payroll checks and made tax payments, transfer the total fro the Deposit Account to the Payroll Account.
The Operating Account and the Payroll Account are what are known as "zero balance" accounts, meaning their balance is always reconciled: Because you only take out what you put in, the account balances stay the same. Using online transfer directly through your bank or through your salon software means you know the money is where it needs to be before a payment goes out.
You'll never bounce a check again, and you'll always know exactly where your money is.
