Kids Kreative Korner
When Conducting Your Business, Be Sure You Have a "Paper Trail."
By Bonnie Drew
Never rely on verbal agreements alone to conduct your business affairs. Every sale, order, or business transaction should have some kind of paperwork to back it up. This "paper trail" helps avoid disagreements and possible financial losses.
Depending on the type of business you own, forms to give bids, create contracts, tell customers what they owe, or to order from suppliers may be useful. Always make at least two copies of the completed form--one for your records and one (or more) for the customer.
* Purchase Orders--When you want to buy something from another business for your business, you list it on a purchase order. Many suppliers and wholesalers require a signed and numbered purchase order every time you place an order. You can buy packages of numbered purchase order forms at the office supply store.
When you make out the purchase order, you keep one copy for yourself and send two copies to the supplier. If you have to call the supplier later to discuss an error in the shipment, they will ask for your "P.O. number." P.O. is short for "purchase order." The number on your purchase order helps them locate the exact order you wish to discuss.
* Bid Forms--A business that performs services of any kind may find bid forms useful. These forms, also called "estimate forms," can be purchased at an office supply store or created on your computer. You use the form to write up a description of the job you're proposing to do, your expenses, and your fees. If you operate a pool-cleaning service, for example, a customer may request a written bid from you and several other companies. After comparing bids, the customer will choose one company to do the work. If you get the job, you may wish to have the customer sign a contract before you begin.
* Contracts--A catering service, Lunch Box on Wheels, has customers sign a contract when they book a dinner. The owners spend a lot of time and money preparing dinners for up to 200 people. It would be a disaster if they showed up with the food, and the customers said they had changed their minds. Most caterers also require customers to pay a deposit when the contract is signed.
A signed contract is your assurance that the customer really wants to work done and intends to pay you when you finish. Office supply stores have sample contract forms, but it s often easier to use your computer to produce contracts.
This is a checklist of points you may wish to include in your contract:
* Date contract was written* Name and address of customer
* Date service is to begin and end
* The place service will be provided
* Equipment you provide
* Equipment the customer provides
* Supplies needed and who buys them
* Detailed description of services
* Detailed description of products
* Special instructions
* Terms of payment
* Amount of deposit
* Date payment is due
* Signature of customer agreeing to terms
If you're dealing with larger amounts of money and want to be sure your agreement covers every legal aspect, you should have e a lawyer write your contract.
* Invoices--When you finish a job or deliver a product, you get paid by presenting a bill. An invoice is a form for telling customers what they owe. When they receive the invoice, they know it's time to get out the checkbook and pay the bill.
You can make your own invoices on the computer or buy them at an office supply store. It's a good idea to number your invoices. Then, if you need to discuss a bill with a customer, you can refer to the invoice number.
Most customers pay promptly, particularly if you deliver the invoice in person and stand there looking expectant. If you mail the invoice and the customer doesn't pay within 10 days, send a second copy as a reminder. Office supply stores have stamps or stickers to use on the bottom of invoices to prompt slow-paying customers. You're most likely to get paid if you remain courteous and friendly, no matter how many notices you have to send. However, you should carefully consider whether you want to work for this customer again in the future.
* Monthly Statements--In addition to the invoices you provide after each sale, your regular customers will appreciate receiving a monthly statement. A monthly statement is a summary of all activity on their account for the month and the current balance due. Some customers like to pay their bill when they receive their monthly statement.
Office supply stores have standard forms for monthly statements. However, the easiest way to create customer statements is on your computer. Some bookkeeping programs even generate monthly statements for your customers automatically. Above all, sending monthly statements is a courtesy to your customers and the mark of a professionally-operated business.
Bonnie Drew is the author of FAST CASH FOR KIDS (2nd edition), published by Career Press (1-800-227-3371). She is also the creator of the KIDS BUSINESS software for young entrepreneurs, available from Homeland Publications (713-332-9764).
Drew is also Editor of YoungBiz online magazine, published by Kid's Way, Inc., a company that helps youth prepare for business and the workplace of the 21st century. For more information, write to Kid's Way at 5589 Peachtree Rd, Chamblee, GA 30341 or call toll free 1-888-KidsWay (1-888-543-7929). YoungBiz magazine can be found at http://www.youngbiz.com
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