Cash flow management is the single largest issue facing small businesses. It’s also one of the most commonly underappreciated business management tools. With roughly 4 out of 5 small businesses failing within the first 5 years of operation, many often assume these are simply bad ideas rejected by the marketplace. While that might be true in some cases, the truth for many companies that go out of business is simple - access to working capital completely evaporated.
Look, I get it. As a Controller, I’ve had to balance payroll, trade vendors, insurance payments, taxes, outstanding loan payments...you name it. Of course, a snarky retort could be, “If you’re profitable, then why isn’t there enough cash to go around?” This ignores the fundamental difference between accrual vs. cash basis accounting. The timing difference between your P&L or Income Statement reporting period and actual, realized cash receipts creates this gap. This is particularly true if a larger customer ends up paying late.
We can help you create strategies that give you options when your cash flow is running tight. Contact us today and we’ll get to work on a plan of action for your business.
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