Cash is king.. except when disguised in false clothes



Which method of accounting do you use: Cash or Accrual?  

Most people who are not accountants say that they don’t understand the difference.

Accrual method includes both your Accounts Receivable and your Accounts Payable and therefore reflects the best feedback for how your business is doing because it includes what you’ve earned and what you owe.

Cash method only includes what you’ve actually collected and deposited and what you’ve paid out.

If you don’t have accounts receivable and you pay your vendors and your credit card balance in full the minute the bill comes in (yes.. some people have businesses like this!) then your cash basis is pretty much same as accrual for you.  For most of the rest of us, accrual is more accurate.

Your cash balance is important.. in fact it’s crucial.  If you don’t have enough cash to pay your bills and payroll, you’ll be using your savings, adding debt or jeopardizing your credit score until you do!

Spoiler alert!  If you use the Cash method… have a big cash balance and a lot of unpaid bills and a credit card balance that hasn’t been recorded, you’re not seeing the true picture of how your business is doing.  On the flip side if you bill your customers by using a Word document and don’t record them as Accounts Receivable invoices in your QuickBooks or accounting systems, you’re understating your net income.  

You could be doing much better or much worse than you think you are!

Take the necessary steps to reveal the true picture of your company’s financial health.  More about that in my next post.







What do you want this season?

Twas the day before Christmas and all through the house,
Only two of us stirring, only one was a grouse.
The house was a mess but no one did care
Because we’re all family and this time together is rare.

What is your wish this season so bright?
Are you wishing you had done more to make it all right?
It’s time to reflect on the 2012 things you did well
Then move on to next year where possibilities dwell.

Were you hoping the numbers would give you a clue?
That QuickBooks would tell you what you need to do?
Or Facebook would put new clients your way?
That Twitter would show you the trend of the day?

The economy sputtered and rallied in waves,
The ups and the downs..seems like nothing behaves.
We all keep watching, hoping all will work out,
And I tell you it, I have absolutely no doubt.

If you focus on customers, employees and care
Quality, service and more if you dare,
Listening, thinking and doing your best,
Implementation will take care of the rest.

Enjoy this happy time, friends that are dear,
I’m glad to have been part of your lives this year,
Now dash away, dash away, dash away all,
There’s fun to be had ….Happy Holidays, all!

Thanks for letting me be part of your lives this year! Let’s make 2013 a fabulous year together!


4th Quarter Hail Mary Pass

Owning a business is like being a first year head coach of a promising football team working toward the regional championship.

It’s the beginning of the 4th quarter and the score is tied…plenty of time on the clock to win or lose the game.

As the coach, you have to assess your own team’s remaining energy, the field conditions and the strength of your opponents. You have to decide whether to try and slam as many points on the scoreboard as possible or whether to stall and put points on the board at the very last minute with a Miraculous Hail Mary Pass.

What is your Game-winning Finish Strong (thanks Lance) strategy for 2011?

  • Straighten out your financials and figure out how in the world you really are doing

  • Define what you want the company to be when it grows up

  • Figure out how to free up 5 hours a week to work ON the business not just in it

  •  Turn loose of that energy-draining employee that makes you grit your teeth

  • Develop a hiring plan so you get solid, energetic employees to help you grow

  • Create a Tactical Marketing Plan so you spend your hard earned $$ on actions that truly bring in customers, clients, patients and Raving Fans

  • Take a vacation, go to a ballgame, call your mom and dad, play your guitar…. your choice

  • Stop repeating yourself…wishing, hoping.guessing….and GET MOVING!

    The clock is ticking and it’s your call, coach.


As I work with business clients, it never ceases to surprise me that business owners just don’t know their “numbers”.  When meeting with them to assess how their business is doing and what they would like to change about it, I always ask them a series of questions such as:

  • What is your average sale?
  • How many patients/clients/customers do you serve every day?
  • Who are your top 5 customers?
  • What/who are your best lead sources?

I continue to be amazed that business owners can’t readily answer my questions!  These types of Key Performance Indicators (KPIs) are one of the first things I help my clients develop because they provide a great snapshot of their company.  It’s sort of like taking your measurements before you go on a diet or start working out to build muscles.  Before you shrink or grow some part of you… you want to know where you are.  And you want to be able to celebrate positive changes!

Getting the information from your accounting data can be simple if you design your information flow/data input process to provide multiple pieces of data that you can use to sort or subtotal.  For example, one of the simplest ways to provide good information about your client base is through your setup of new Customers in QuickBooks.  (I know that there are other software programs out there… i just don’t recommend them for most small businesses).  There are many fields already present and you can add additional customized fields if it makes sense.  One field you should definitely use is the Type field in the Additional Info tab.  Think about how your customers fall into major categories and use that as Type. I found this to be of enormous help when we owned our sign company in Maryland.  I categorized our customers as Retail, Restaurant, NationalSign, Property Managers, etc.  By setting up customized reporting, I could quickly determine the makeup of our sales and monitor it as I made changes and added marketing to increase one of the sectors.  If you’re not using this field (and if it is feasible), I suggest you go back and categorize all of the customers you have sold to this year so your current year’s data will be categorized.

This is just one very simple start that can help you as you work to get a grip on your company as it is and you make plans to make it better or bigger or both.  The other simple but handy way to look at largest customers is to look at the Reports related to Sales.  You can do Sales by Customer Summary to see a total per customer.  If you set up your Items in a useable and logical manner, you can get great information about what items are selling the most.

If you are a data nerd like me, it’s easy to get carried away with looking at all this but coming up with 4 or 5 reports related to customers and sales that you run and review monthly is incredibly helpful.  And that’s just a start…profitability and labor are two other areas you can look at with the help of QuickBooks data.

What would like to be able to measure about your company?