Getting paid for your services and products is a major priority for small business owners and so is getting your people paid, too. Using systems like Paypal and Venmo may seem like the quick and easy way to do this, but they cause more problems than you’d think.
Your team at Five Star Professional Bookkeeping has seen first-hand how difficult keeping track of business transactions can become when you use these kinds of payment systems, and we’re here to help fix your transactional troubles.
So, we’re just going to go out there and say it. Paypal and Venmo have no business being in your business. However, a reputable bank of your choice certainly does.
Banking on Your Bank
When using an insured bank in the United States your money is protected by the federal government.
Believe it or not, banks actually do care about your experiences with them. Positive experiences with your bank help develop strong relationships between your business and their business. As a happy customer, you store your money under their lock and key and, as your business grows, so does the bank.
Payment systems like Paypal and Venmo aren’t as concerned about money staying or growing in their accounts as much as they are about passing funds from one person to another. These platforms were built for individual transactions, and fees on each transaction are how they make their revenues.
Banks today have custom-made payment platforms, like Zelle, that were made to help you better track your transactions. For example, when you use a bank’s payment platform you have the option of writing in a memo.
Remember back in the “old days”? Before all these electronic transactional platforms were made available, you’d write out that paper check, and in the bottom left corner was a little bit of space labeled “memo” for you to make a note explaining why you were even making this payment in the first place. That memo option is still alive and well with Zelle.
By the way, a good piece of advice here to live by, when working with any financial transactions, is to be sure that your people “get the memo.” It is always a better practice to say something about a transaction than nothing at all. You’ll save time and money with your bookkeeper, accountant, consultants, and more if it’s easy to figure out exactly where the money went and why.
Your bank is also more reliable for resolving transactional snafus that may occur in your company’s accounts payable and receivable activity. It’s all because of those short descriptions that go along with each transaction your company makes. Your bank can better locate when, where, who, how, and why each transaction was made and with greater ease.
Getting a bank representative on the phone to fix an issue with transactions is another great example of the many helpful ways your bank can assist you. Banks have customer service representatives standing by for those moments when resolving your inquiries and concerns simply can’t be handled online or over the app on your mobile device.
Speaking of getting someone on the phone, when it comes to Paypal and Venmo…
Who You Gonna Call?
Well, certainly not Ghostbusters and you can think again if you imagined someone would answer your call at Paypal or Venmo. These companies weren’t built for customer service and they don’t have a 24/7 team of representatives waiting in the wings to help you figure out who or why a transaction from your account was made.
In fact, the only help a representative from either of these companies can give you–if you can even get someone on the phone in the first place–is with possibly resolving an unauthorized transaction. They aren’t trained for helping you find out who you sent your money to or why it was sent in the first place.
As a small business owner, you have to be reliable with your financial transactions and the payment systems you use to do your business with should do the same. You need to keep track of the who and the why. Not just the where, when, and how. So, make sure the payment platforms you choose to use for your business can live up to this same level of accountability.
While we’re on the topic of ACCOUNTability…
Paypal and Venmo aren’t Designed for Accounting
When Paypal and Venmo were being developed for the everyday consumer the creators weren’t thinking about the importance of keeping detailed invoices and receipts. Actually, the entire purpose of their creation was to focus on building a payment platform that could transfer funds quickly. That’s all.
When you’re running a small business you have to keep track of exactly where your money is going, yes, but also why it’s being sent or received, and who is sending or receiving those funds. Identifying a person in Paypal and Venmo is inconsistent. There is no place for you to make a note as to why you’re paying this person receiving the funds. Nor is there a way to define if the payment is a full or partial payment.
With random email addresses like “geckoismyname1138@yahoo.com”, you can’t determine who or what business these email addresses are attached to, making it impossible to properly record your business transactions at a later date.
You need to know the who, what, where, why, how, and when with your small business’s financial transactions and as far as our experience goes, we can honestly say we’ve never done business with someone by the name of Gecko. (Not to be confused with GEICO. Ha, you see what we did there? We know, our sense of humor is a bit Progressive. But we “nsure” that you won’t have to read another one of these puns for the remainder of this article.)
Anyway, with payment platforms like these, you can also hook up several accounts, such as your checking, your savings, and even your credit cards. If you aren’t careful with how you track your spending, you could easily make a purchase for your business that removes a portion from your checking account and another portion of that purchase on your company card, making one purchase show up as two separate purchases.
What is Designed to Keep Track of Business Transactions?
As mentioned, your bank is a much better match for making your electronic business transactions. If you have to make or receive a quick payment, use your bank’s own payment platform. Using slapdash payment processing like Paypal and Venmo for your business transactions is only going to get you into a lot of tracking trouble.
Plan your payments ahead and don’t be afraid to write out a check instead of making those electronic transactions. You know, just like Grandma used to do for your annual $12 birthday gift. Even she knew the best transactional practices by using that little memo section in the bottom left-hand corner. “Happy birthday! Don’t spend this all in one place.” After all, they don’t call this transaction system a “paper trail” for nothing.
Hiring an exceptional bookkeeper would be another smart business move for staying on top of your business transactions. Your bookkeeper is there to help you keep the lens on your finances clean and clear. It’s your job to do your job. Let the transaction professional at Five Star Professional Bookkeeping help you do the tricky tracking part… but not so tricky that it can’t be figured out after the fact!