For most businesses, business cheques are invoices that need to be paid regularly. The amount is often determined by the gross revenue of the organization. Business cheques are also known as cash advance cheques or loan payments and are usually made to pay for essential expenses such as: payroll, vendor bills, accounting expenses, etc. While they do help businesses pay their invoices quickly, business cheques can also cause problems if they are not paid on time.
business cheques can be of several types. Some cheques include cheques for special events like trade shows and conventions. Others may be business cheques to pay for advertising and promotional costs. Sometimes, cheques are made to pay employees' wages and some companies may make special payment arrangements for salaried employees to cover holiday costs. Yet others are just for general operating expenses.
Most businesses will have their own methods for writing and sending out their business cheques. However, if a business receives cheques from accounts payable, they are required by law to send a cheque, and they may also be held responsible if the cheques are not received on time. If an account payable institution does not receive payment from the business within 60 days, it must forward the payment to the business.
Cash advances are another method of getting cash quickly. Many companies offer payroll deductions when individuals use payroll cash advances. These payroll deductions can help a business to pay expenses more quickly because the amount saved can be applied as income tax refunds. Payroll cash advances are usually made on the basis of an anticipated income tax refund. Cash advances can also help businesses pay for unexpected costs.
Some businesses do not accept cheques. They rely on paper cheques. They prefer to meet cheques with the use of a bank draft, check or cash drawer. In some cases, cheques are automatically converted into cash by the banks. Businesses that are on cheque default lists are not able to accept cheques from other financial institutions.
Businesses should consider their options before choosing which method of receiving cash they need to use. There are advantages and disadvantages to each method. Some cheques help businesses pay expenses more quickly than regular cash payments would. For this reason, cheques are often used by companies to help them meet payroll expenses. Some companies also choose cheques because cheques help them avoid tax penalties. A company that avoids paying tax may incur interest and penalties, so paying cash can prevent these problems.
Paper cheques take time to print and cannot be used immediately. This limits the amount of time that a company has to pay a payroll expense, so paper cheques are often used at the end of the month. Withdrawals from a bank account to allow a business to pay its expenses as soon as possible to avoid penalties. This is an advantage for businesses that need to pay their payroll quickly.
Businesses that use cheques will have to balance the cost of a cheque versus the benefit of paying payroll taxes and other charges. Businesses should determine how much money they can afford to pay cheques monthly and then allocate the amount based on their needs. If a business is generating income, paying payroll taxes, and maintaining accounts receivable, it may make better sense to pay cheques monthly. On the other hand, if the business does not generate income and accounts receivable, cheques may not be a feasible option.
Many companies choose to pay cheques quarterly or in some other fixed interval. Some businesses prefer to pay cheques once a month while others send them twice a month. For businesses with more than one location, they may wish to pay cheques more regularly so that they don't run out of cash. Businesses should consider the convenience factors of payroll services and account payable software before choosing the best system for their business.
Payroll services and account payable software can assist businesses with online processing. The online processing option allows a business owner to process payroll by entering information online. The reports can be generated automatically and sent to an e-mail address or fax. A business owner can also create custom reports that can be sent to an e-mail or printed off. This eliminates the need to write a manual report for every individual employee.
A business can avoid late payment fees and penalties by using electronic funds management. By setting up electronic funds management, a business owner can ensure that cheques are received and processed on time. Electronic funds management is usually free for small business. Businesses should investigate all options that they have before deciding on payroll and electronic payment options.