Accrual Basis vs. Cash Basis Accounting

Are there any accountants out there that would like to convince me that accrual accounting is better for a small business than cash accounting?

I'm talking about having a discussion, not an argument. An exchange of ideas and open minds. We can have a civil chat and explain to each other why we think our idea is better.

I believe that cash accounting is the only way to go for small businesses unless accrual accounting is required for a bank loan.

How small a business?

Let's start at the $25,000,000 mark. That the IRS limit established in 2018 before you need to do accrual accounting for tax purposes.

I am guessing that there are a few accountants out there that disagree with this position!

Are you interested in having the conversation?

Please let me know in the comments!

#accounting #wtcfg #bookkeeping

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Crowdfunding for Cash Management

Do you know that crowdfunding can be an effective cash management tool for raising capital?

Crowdfunding is pre-selling products that are in development. You owe people something, but usually at a good profit margin. You don't sell equity in your company and you don't go into debt. You do get:

- Publicity before you launch

- Feedback on your product

- Ideas for additional product

- An idea for market acceptance

- Names for your mailing list

- The cash you need to launch the product or business

Most people think of Kickstarter or Indiegogo (I've used Indiegogo) as only for new companies...wrong! You can introduce new products as well.

I've done crowdfunding for non-profit as well as for-profit organizations. Possibilities for funding:

- Book launches

- Food vendors

- Manufacturers

- Service providers

- Race/adventure organizers

- Non-profit fundraising

The possibilities are literally endless.

Have you done any crowdfunding? I'm looking for any reason not to do it.

Have you bought something from...

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Cash Flow Management Software

If you are interested in learning more about cash flow management, then you should follow Barb EasterBlaine Bertsch, and Jeremy (JD) Burke from Dryrun - Cash Flow Management Software. These hyperlinks will take you to their LinkedIn pages.

Why would I recommend you follow someone else and not spend all of your cash flow time on my posts and articles?

A few reasons:
1. They have a great point of view

2. They work with end-users and finance professionals from all over the world

3. DryRun is the best cash flow management software I have seen so far for businesses over about $1 Million in revenue

4. They are educating the marketplace

I'd love feedback on what you think about DryRun software.

Do you use cash flow management software? Or spreadsheets?

If so, I'd love to hear your opinion on your software or why you use spreadsheets.

What do you like? What doesn't work? What else do you need?

Let me know in the comments below!

#tcmp #finance #bestadvice

*I am not...

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The Courage to Lead Episode 94 - Courage to Care About the People

Follow this link to listen to the episode on Apple Podcasts.

I had a great time on The Courage to Lead with Harlan Hammack discussing cash flow optimization (including some counterintuitive tactics), planning for the future, explanation of some of my offers here on the website, and more. 

I also got to share a bit more of my own story of how I came to be involved in cash flow advising. It was not an easy decision, but it was a logical one.

Coach Harlan was a great host - big thanks to him!

Follow this link to listen to the episode on Apple Podcasts.

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Payne Points of Interest #42 Calculating Cash Flow Featuring David Safeer

 

In this episode, I discuss the ins and outs of calculating cash flow.

Click here to listen on Google Podcasts.

Have an idea? Anything I missed? Let me know in the comments below.

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Don't Try to Not Hit the Tree

 

I just came across this favorite Cash Management Minute, and find its principles to stay true as ever.

It is much more effective to decide what to do instead of what not to do - in skiing and in business!

Does anyone else find this to be true? Or are you looking forward to hitting the slopes this winter like I am? 

Let me know your experiences (or your favorite place to ski) in the comments below!

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Revenue Growth: Beyond Sales & Promotions

 A quick internet search on the term “list of ways to grow sales” brings up list after list of “proven ways” to grow sales. Most suggestions are sales and instant demand generation activities.

Why is there so much focus on sales and instant demand generation? Three fundamental reasons:

  1. These are quick fixes that often create the illusion of an increase in sales, followed quickly by an offsetting dip in sales the following month or quarter. The pressure to “make the month” or “make the quarter” overrides the damaging creation of a cyclical pattern that becomes obvious to the marketplace and reinforces these solutions, which usually involve discounting, “stuffing” the distribution channel, or providing incentives to purchase.
  2. This is the “fun” stuff and people are enamored with the creative solutions of advertising, promotions, slogans, flashy websites, and spending money to make money. It feels good to buy...
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The Thoughtful Entrepreneur: 482 - When You Hit the Profit Wall with David Safeer

 

Click here for a link to the podcast.

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Payne Points of Interest #93 Deeper Issues that Could Cause Cash Flow Issues?

 

"Traditional accounting does not track cash very well. Your cash might be found on your balance sheet."

 

Link to original podcast page

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How to Do Bookkeeping for Cash Management Success

Readers of my article “7 Proven Steps to Manage Your Cash with Ease” asked for more details.

In case you missed that article, or need a reminder, here are the steps.

1. Do Your Bookkeeping for Cash Management
2. Find Cash in Your Business
3. Make Quick Fixes
4. Work on the Big Cash Management Ideas
5. Forecast Your Quickly and Easily Cash
6. Manage Your Cash
7. See Your Results on a Dashboard

This article is an overview on how do set up your bookkeeping for cash management success.

Instead of a checklist or a “how to” article, I will tell you how a client (Rebecca) and I cleaned up the her company books. The company is “The Spa,” a high-end day spa.

(The method is from a real client, but the name and type of company are different to maintain anonymity.)

The End in Mind

Rebecca was stuck at about $3 million in sales. Her biggest concern was running out of cash, even with a big credit line and healthy profits. 2-3 times a month she was almost out...

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