Optimizing Your Customer Service

Business moves at the speed of the internet, and those who don’t keep up will be left behind. This is especially true in the delivery of customer services, whether to other businesses or consumers.

In the olden days of the 20th century, good customer service consisted of doing what you promised to do and responding in a timely manner to queries from customers. Of course, you still need to do those things, but it’s now considered the norm, not an exception. Today, to satisfy and delight customers, you must take their experience to the next level.

That’s where digital capabilities come in. New technology which makes the customer’s journey more painless and pleasurable, is revolutionizing a wide range of industries, from retailing to passenger transportation.

Which grocery store would you rather patronize: the one that provides high-quality products, wide selection, and friendly staff or the one that provides all that PLUS shop online/home delivery, automatic coupon clipping, and self check-out?

The accounting services industry is another field that’s ripe for change. At Xendoo, we’re fortunate in having been built from the ground up for the 21st century, while many traditional accounting firms are struggling to adapt. Here’s how we crafted our customer experience, using principles that work for any business.

Identify Your Customer’s Pain Points.

Look not just at your own business, but your industry as a whole. What do people complain about most often? It could be a lack of communication/information, one-size-fits-all products that don’t fit their needs, or slow delivery.

Even if a pain point seems to be an unavoidable aspect of the industry, write it down. This is the first step to creative problem solving that may give you a huge competitive edge.

The typical customer experience with traditional accounting firms is littered with pain points. Slow delivery is often an issue, from waiting 60 days or more for monthly financial reports to not filing tax returns on time. Another problem is difficulty communicating with the CPA, who may not return calls for several days.

Identify All Customer Touchpoints.

These are where the problems actually arise. Examine the mechanics of each step in the customer journey, from the first contact to the final invoice. Which steps are causing delays, inconvenience, or frustration for your customers?

For example, you might have installed an IVR system to answer your phone. But if it doesn’t offer the right options for customers to get the information they wanted, they’ll be just as angry as if you didn’t answer the phone at all.

Xendoo found that the most painful touchpoints with traditional accounting related to interactions with the CPA. When CPAs do the books by hand, there’s no time to actually talk to clients. There’s also more hassle for the client in having to come to the office to process physical paperwork.

Implement Your Solutions.

How can those touchpoints be improved for a faster, more enjoyable customer experience? The answers for each business will be different. You may decide that you need to retrain or hire staff, revise workflows, or bring in new technology.

Xendoo solved the problems of traditional accounting by utilizing a cloud platform. This proactive approach prevents customer pain points before they happen:

• Mobile app or desktop computer access to financial reports anytime, anywhere

• Scan and send documents or ask questions through the app

• P&L statements delivered by the 5th day of the following month

• Bank transactions automatically entered in the books in real-time

• Eliminates the risk of human error

• Digitized receipts and automatic tax coding for easier return filing

• A team of 2 CPAs and a bookkeeper have time to talk with clients

• Easy integration with more than 500 business management applications

Both You and Your Customer Reap the Rewards.

The speed and efficiencies of Xendoo’s cloud accounting system do make our lives easier. But the ultimate benefit goes to our clients, who have more profitable ways to spend their time than on bookkeeping hassles. It’s a win-win!

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Net Profit and Retained Earnings: What’s the Difference?

You’ve probably seen these two terms on your monthly profit & loss statements. Maybe you’re not sure what they mean, how they’re different — and if it matters.

Here’s a quick overview to help you better understand the financial performance of your business.

 

Net Profit

Also called Net Income on some P&L statements, this number is the money you have left after you’ve paid your expenses. For example:

    $70,000 Revenue

$60,000 Expenses

= $10,000 Net Profit

 

Revenue is the money you receive from selling products or services to your customers.

Expenses are everything businesses pay to keep operating, such as:

  • Cost of goods sold
  • Rent & utilities
  • Employee payroll
  • Office supplies
  • Bank fees & loan interest
  • Insurance premiums
  • Repairs & maintenance
  • Advertising & marketing
  • Legal & professional fees
  • Taxes
  • Depreciation

 

Retained Earnings

Sometimes called member capital, this is what’s left from your net profits after you pay out dividends to shareholders. It also includes your retained earnings to date.

Shareholders are investors who own stock or equity in your business.

Dividends are a company’s distribution of revenue back to the shareholders. Sometimes they are paid as a cash dividend, of companies may offer a dividend reinvestment program (DRIP) for shareholders to reinvest the dividends back into company stock, usually at a discount.

 

The formula for calculating retained earnings is:

Beginning retained earnings + net profit – dividends = current retained earnings

 

In the following example, we assume you have $10,000 in net profit and a total of $2,000 in dividends paid to shareholders:

 $1,000 Beginning Retained Earnings

+ $10,000 Net Profit

  $2,000 Dividends

=   $9,000 Retained Earnings as of the end of this statement period

 

If you don’t have any shareholders, your calculation would look like this:

      $1,000 Beginning Retained Earnings

+ $10,000 Net Profit

          $0 Dividends

= $11,000 Retained Earnings as of the end of this statement period

 

Net Losses

Unfortunately there is a possibility that your expenses exceeded your revenues, or that you made a net profit but it was offset by dividends payouts. For some businesses — such as those with seasonal revenue fluctuations or have just made a large capital purchase — this is normal. For others, it’s a red flag.

 

This is how retained earnings reflecting a loss would look on your profit & loss statement:

       $500 Beginning Retained Earnings

+ $1,000 Net Profit

$2,000 Dividends

=  –$500 Retained Earnings as of the end of this statement period

 

Why Retained Earnings Matters

Since this number is a running total of your retained earnings for the year to date, lenders and investors will consider it even more important than net profit when deciding whether to trust you with their money. It gives a clearer picture of your business than just looking at monthly net profit figures, which can vary quite a lot depending on a wide range of factors.

 

Retained earnings also serve as an indicator of where to put that money.

  • If the number is low, it would be better to keep the money in the business as a cushion against cash flow problems, rather than handing it out as dividends.
  • If both net profit and retained earnings are substantial, it’s time to invest in growing your business, perhaps with new equipment or facilities.

 

Want to learn more about your monthly profit & loss statement? Check out this quick guide:

Understanding Your Profit & Loss Statement

Knowing your financials is essential to business success. Xendoo puts those key numbers at your fingertips with our exclusive app that you can access from anywhere, anytime. Plus, our CPA team will help you understand what the numbers mean, so your small business can keep moving in the right direction.

 

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Understanding Your Profit and Loss Statement

Every month you receive a P&L statement from Xendoo. In a nutshell, it tells you whether your business made a profit or a loss — for the month as well as the year to date.

It can do more than that, though, if you know what the numbers mean. Here’s a quick guide.

Revenue on a profit and loss statement

The money you received from customers who bought your products or services. This section probably itemizes sources of those revenues, so you can see which areas are bringing in the biggest returns.

It shows the total sales amount including any sales tax collected. When you remit the tax to the state, that amount will be listed as a debit entry to be subtracted from total revenue. (All debit entries are shown in parentheses.)

This section will also account for any merchandise that was returned to you by customers, as a negative entry. Since the original sale is listed in this section, the return has to be there also, so that it balances out to zero.

Cost of Sales

These are the expenses directly related to the products or services you sell, including your purchase costs, labor, storage, and delivery.

The line called “Cost of Goods Sold” can either be what you paid for merchandise that you resell or raw materials that you make into products for sale, as well as manufacturing labor costs.

Gross Profit

Revenue – Cost of Sales = Gross Profit. This line is immediately under the Cost of Sales section. If the number is in parentheses, you made a loss instead of a profit.

Be sure to look at the year to date column as well as this month’s column. There’s no need to panic over one atypical month if the year to date figures are in line with your expectations.

Other Income and Expense

Here is where you’ll find everything not directly involved in making and/or selling your product.

  • Office and equipment-related expenses such as utilities, leasing, and maintenance
  • Employee-related expenses such as salaries, insurance, and business travel
  • Fees such as licenses, bank charges, and merchant fees
  • Taxes: real estate and payroll
  • Costs of advertising, legal or other professional services

Net Income

Gross Profit – Other Income and Expense = Net Income. This line is immediately under the Other Income and Expense section. Net Income is your “bottom line”, which reveals whether your business is operating in the black or the red. Note, it does not include your business income tax, which will be calculated at the time you fill out your return.

Because we know how important these numbers are to your business decision-making, Xendoo guarantees delivery of our clients’ Profit and Loss statement by the fifth business day of every month. This allows you to quickly identify  — and react to — both trouble spots and growth opportunities. It’s just one of the ways we help keep your business growing strong.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

Free at Last! 5 Steps to Get Your Business Out of Debt

The vast majority of small businesses need a loan to get started or take advantage of a growth opportunity. That’s all perfectly normal. But what if the amount of debt — not to mention all that pesky interest you’re paying — is causing you sleepless nights?

Then you’ll want to pay down that debt as fast as possible. Here’s how to go about it.

1. Can You Afford to Pay More?

The simplest solution would be to increase your payments, without changing anything else about your operations.

Take a look at your current budget, or update your old budget it you haven’t done that in a while. Current cash flow may be sufficient that you could put some more of it toward debt repayment. (Your Xendoo accountant can help you decide this.)

You might be surprised at the result. Sometimes what seems like a crushing burden isn’t really so bad once you get the numbers organized.

2. Reduce Debt by Working with Creditors

Creditors don’t want to send your account to collections, which will cost them a lot of money. They’d rather work with you to get the money paid, so don’t be afraid to give them a call.

Here are some ideas. Just bear in mind that some of them will impact your credit rating, so they’re best used if you’re not planning to apply for another loan within the year.

• Renegotiate loan terms with a lower interest rate, reduced late fees, restructured payments, etc.

• Renegotiate supplier contracts with a bigger discount for early payments or bulk buys, extended payment terms, etc.

• Read the fine print in loan terms: Sometimes an extra payment can be deducted from the capital (reducing the amount of interest you owe), or credited to a future payment when you might be short on cash.

• Get a debt consolidation loan, which transfers all your high-interest debt (bank loans, credit cards, etc.) into one low-interest payment plan. Beware, though, you may have to provide collateral or a personal guarantee.

• Let a debt restructuring company do all this for you. If you don’t feel comfortable negotiating with creditors, you can hire someone — for a fee — to act on your behalf.

3. Reduce Expenses

Now it’s time to go over your costs with a fine-tooth comb and eliminate areas of waste. Look at everything from the cost of materials and labor to office overhead and marketing. The goal is to free up more money to put toward your debt.

• Eliminate low margin products or services. If they aren’t generating enough revenue, they’re not worth the money and effort you’re putting into them.

• Streamline inventory. In general, merchandise shouldn’t sit on the shelf for more than 30 days. Improve cash flow by adjusting your purchase amounts. Look for suppliers that offer rights of return for unsold goods.

• Control labor costs. Avoid paying overtime by fine-tuning scheduling or converting to part-time employees. Cross-train employees to fill more than one role.

• Downsize your office space. Do you really need so much, or are you storing too much inventory and/or equipment? Is there another space available for lower rent?

• Lease expensive equipment rather than buy it. There are many factors to consider — including shelf life, maintenance needs, product selection and taxes — so be sure to discuss with your Xendoo accountant whether this would be a cost-effective strategy for you.

• Weed out unprofitable customers. When you were first starting up, you may have offered hefty discounts just to get some money coming in; tell those oldies that the free ride is over. Also cut loose the customers who are constantly late paying you, or demand too much time and attention for the amount of business they bring.

4. Increase Revenues

This may seem obvious, but more money coming in is more money to pay down your debt. Here are some ideas.

• Raise prices. Small businesses often fear to do this, in case they lose customers. But you’re entitled to a cost of living increase like everyone else.

• Cross-sell and upsell. Promote additional, related products and services with each sale, or put together bundles that entice customers to buy more.

• Add products or services to your line. What else do your current customers need? Or what new niches could you tap into with something similar to what you already offer?

• Liquidate unused assets, so you can at least get some money back out of them. Outdated office equipment can go on eBay or Craigslist. Excess or obsolete inventory can be sold to an inventory liquidator. Lease unused office space to another business.

• Take a second job. This is probably the last resort for small business owners who are already slammed with work. But it might be worth it for a few months just to get that debt monkey off your back.

5. Create a Debt Reduction Strategy and Timetable

Now that you’ve figured out how much extra money you can put into paying off your business debt, you can plan a payment strategy.

One option is to commit that money entirely to debt repayment and swear off making any other purchases until the debt is gone.

Another approach is to decide that you will pay a set percent of your profit to creditors every month.

Use that amount to calculate how many months it will take you to get out of debt (don’t forget to include interest). Put a big, happy note on your calendar at the month when you’ll be debt-free, as motivation to stick to the plan. As financial planning expert Gail Vaz Oxlade says, “If you don’t write it down, it’s a dream, not a goal.”

There are many more ways to get the business debt paid off faster, but not all of them will work for every business. Be sure to consult with your Xendoo CPA, who will go over your financials and help you make the right decisions. Won’t it feel great when you can go to sleep at night knowing that your finances are under control?

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Florida Resale Certificate — Sales Tax Exemption for Retailers and Suppliers

If you’re a retailer or similar business, you don’t have to pay sales tax on the goods and services you purchase for the purpose of reselling, renting, or leasing them.

Example 1: Your business sells brand name bicycles to the public. You don’t pay sales tax when you buy those bicycles from the manufacturers.

Example 2: You are a bicycle repair shop. You don’t pay sales tax on the parts you buy for use in the repairs, nor for any services you have to outsource to complete those repairs, such as welding.

Example 3: You custom make bicycles to your clients’ specifications. You don’t pay sales tax on the materials used in construction: parts, paint, etc.

In order to receive the sales tax exemption, you must present a state resale certificate to your supplier at the time of the transaction. Both retailers and suppliers must abide by certain regulations in the use of the Florida resale certificate.

Sales Tax Exemption for Retailers

Purchases that qualify for the sales tax exemption include:

  • Products that will be resold in their present form
  • Physical components of products made or repaired by your business
  • Services used in the manufacture or repair of those products

Purchases that DON’T qualify include:

  • Tools and equipment used by your business
  • Materials and services used for capital improvements to your business
  • Office supplies
  • Anything for your personal use

In order to get a Florida resale certificate, you must have a Florida sales tax permit. Florida is one of nine U.S. states that do not allow out-of-state resale certificates. The registration number from your sales tax permit must be included on your Florida Resale Certificate.

To obtain a Florida resale certificate, simply print one out from the Florida Department of Revenue website and fill it in. Your resale certificate is good until December 31 of the same year it was issued. So each January, you must make a new one with updated information.

Even if you present your supplier with a resale certificate, they are not obligated to give you the tax exemption. Target, for one, is well-known for refusing to accept resale certificates. The reason they might refuse is that they bear the responsibility for verifying that your certificate is valid, and could end up paying the sales tax plus penalties if it’s not.

Sales Tax Exemptions for Suppliers

When your buyer presents you with a Florida resale certificate, you are required to keep a record of each tax-exempt transaction. You can choose any one of these three methods:

  • Keep a paper or electronic copy of the certificate in your files for three years (so that it can be inspected by Florida state auditors if necessary).
  • Obtain a transaction authorization number by calling 877–357–3725, visiting Florida’s certificate verification site, or using the FL Tax-Verify mobile app. You supply your customer’s resale certificate number and receive an authorization number good for that one transaction only.
  • For your regular customers, get an annual authorization number (which expires each December 31). Then you can batch upload your tax-exempt transactions with that customer at Florida’s certificate verification site.

Of course, in order to accept a resale certificate, your own business must be registered to collect sales tax in Florida.

Whether you’re a retailer or a supplier, we know you’d rather not hassle with all this “taxing” red tape: sales tax exemption, registration, and reporting in the state of Florida. Let our Xendoo tax experts take that load off your shoulders while giving you the time and peace of mind to work on the parts of your business you actually love to do.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

Micro-Influencers and Small Retailers: A Perfect Match

We’ve all seen A-list celebrities endorsing mega brands and stores. This marketing strategy’s price tag (up to $1 million for celebrities like Kim Kardashian) is far beyond the scope of most retailers’ budgets, but there’s another way to get in on the endorsement bonanza: social media micro-influencers.

Social media influencers

They are people who have gained popularity on Youtube, Instagram, or other social media platforms. With the followings in the 6 or 7 figures, what they say about you can have a significant impact on your sales figures and brand awareness.

The top social media influences are so famous that their endorsement fees now rival those of Hollywood stars. What’re more, studies show that the larger the influencer’s following, the LESS effect his/her endorsement has on marketing results. That’s because the followers are such a diverse group of people that the product being endorsed just isn’t relevant for many of them.

Micro-influencers

These are the people who cater to a tightly focused niche, either of subject matter or location or both. They have fewer followers, but a higher percentage of those followers are your potential customers. They still have personal credibility; their opinion is as highly valued as a friend’s. And their endorsement is affordable, usually well under $1,000. For small businesses, it’s a perfect solution.

Find your micro-influencers

  • Run your own searches on social media.
  • Reach out to internet personalities you already follow. (Find their contact info in the channel’s “About” section.)
  • Ask existing customers who they follow.
  • Invite proposals from influencers on exchange platforms such as FameBit.
  • Use a talent management agency.

Analyze the influencer’s performance.

  • How relevant the content is to your brand.
  • How often and consistently content is posted.
  • How much the audience interacts with the channel.
  • How often content is shared.
  • Channel’s growth rate.

Analytics companies such as OpenSlate can help with this.

Strike the deal.

There are many ways to compensate an influencer besides money:

  • Provide them with exclusive content, i.e. behind-the-scenes access or sneak previews.
  • Cross-promote them on your store’s website and other marketing channels
  • More audience engagement through giveaways, contests, etc.

By strategically selecting and working with micro-influencers, small businesses can engage with a highly relevant fan base at an affordable cost. And their ROI will probably be better than what the big box competition gets from hiring Kim Kardashian.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Phoning It In: 5 Strategies for Small Businesses to Exploit Mobile Technology

These days, everyone’s on their cellphone or tablet. They shop, search, learn, communicate, even run their business. And it all happens at lightning speed, with no limits on time or place.

Mobile technology is massively transforming the way we live, work, and play. For a small business owner who wants to survive and thrive, it’s imperative to be a part of the action. These steps will get you started.

Make your website mobile-friendly.

Work with a web developer to make sure that every page of your website is displayed correctly on small screens, with easy to see text and images.

Connect more with customers.

Social media such as Twitter and Instagram can be a gold mine of potential new customers, as mobile device users have more opportunities to visit those sites. Look around any waiting room, coffee shop, or commuter train, and you’ll see the majority of people looking at their devices.

Understand your customers.

Analytics software can tell you where they are, how they found you, what they shop for, and more. Use this information to tailor your products to better meet their needs and target your marketing to attract more people like them.

Connect more with staff.

A huge array of cloud-based apps is available that can enable everything from remote meetings to sharing project notes to shift scheduling. With everyone accessing the app from a smartphone (their own or supplied by you), you can streamline processes and maybe even reduce your office space.

Manage your business in the cloud.

Check out sales, inventory levels, calendars, and much more from your device, wherever you are and whenever you need to.

In fact, a cloud-based accounting app is the heart of the Xendoo advantage. By integrating directly with your business management system and bank, data entry becomes automatic, instantaneous, error-free, and much more affordable than traditional bookkeeping services.

It’s why we have become the go-to resource for small business owners who need to make the best use of their time and energy while minimizing costs. And we believe that mobile technology will become even more important and useful for small businesses in the years ahead.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.