Archive for August, 2010
3 Keys to Equipment Leasing
Posted by: | CommentsThe 3 keys to equipment leasing are knowing the differences between capital leases and operating leases and the importance of proper accounting. To ensure you’re accounting accurately for equipment leasing, you need to first understand the types of leases available in the marketplace.
As I’ve recommended to you on many occasions, you should lease long-term assets rather than buy them. You know it’s easier on your cash flow. So use your cash instead to hire an employee to operate your new gadgetry.
And I say to lease instead of purchase because leases offer you more flexibility in adjusting to frequent changes in technology and your operating needs. And you account for lease payments like you would interest payments on a loan.
Now equipment could include hard assets like computers or forklifts. It could also include the software which is installed and running on the computer. At the bottom of this article, I give you a list of the types of equipment leases people search for everyday on Google.
Capital Lease
A capital lease is one in witch you will own the device at the end of the lease. You’ll have a “dollar buyout” at the end of your lease.
Operating Lease
In an operating lease, the owner transfers only the right to use the property to you. It is a short-term, cancelable lease. And it’s A type of lease which the contract period is shorter than the life of the equipment, and the leasing company pays all maintenance and servicing costs for you.
So an operating lease is the same as you renting the machinery. At the end of your lease, you’ll return the equipment or swop it out for a new one.
Importance of Accounting for Equipment Leasing
I first covered the types of leases so you’d know the difference. And now I’ll cover how to account for these different types of leases in your accounting records.
Capital leases go on your balance sheet as and asset. So you’ll reduce the long-term liability for your equipment or software by the payment each month. That means that each month, your long-term liabilities will decrease by the monthly payment but your short-term liabilities will increase by the same amount — ready for your accounts payable.
Then you will expense the equipment leasing interest on your income statement. And you will reduce your cash by the principal portion of your payment. This transaction will be performed each month until your capital lease has ended.
The reason I make the distinction between the interest and principal portions of your equipment leasing payment is many times your leasing company won’t break out the interest and principal. The invoice you receive from them just states your total monthly payment.
You need to be able to calculate and breakout the interest and principal portions of the equipment leasing payments. So you can do proper accounting each month. And so you know when your lease has ended.
Yes, I’ve heard some companies like Dell Computers will just continue to send you a leasing bill each month unless you notify them that your equipment lease has ended. That’s right, big companies get away with “murder” at your expense.
Now at the end of your lease, contact the leasing company and let them know you plan to purchase your gadgetry (usually for $1) and to send you proof that you own the machinery.
Operating leases are expensed on your income statement and they are not included as an asset on your balance sheet because you don’t have the risk of ownership.
But in the case of a capital lease, you are responsible for some of the risks of ownership. For this reason, the lease is recognized both as an asset and as a long-term liability (for the lease payments) on your balance sheet. And you get to claim depreciation each year on the lease asset and you can deduct the interest expense portion of the payment each month.
For more information and assistance with equipment leasing, you can call or email me.
And for financing approaches for equipment leasing, you should take a look at my Financing Strategies Report which describes various loan programs and how you may use the funds.
Short List of Leasing Programs Thousands of People Search for Everyday (Hey Google I’m not “keyword stuffing”, I thought it would help clarify my visitor’s leasing options)
- Commercial equipment leasing
- Copier lease
- Dental equipment leasing
- IT equipment leasing
- Forklift lease
- Lease medical equipment
- Lease office equipment
- Leasing kitchen equipment
- Manufacturing equipment leasing
- Photography equipment leasing
- Restaurant equipment leasing
- Small Business equipment leasing
- Software leasing
- Used equipment leasing
- And more
Your Small Business Coaching Growth Strategy Wake-up Call
Posted by: | CommentsSmall business coaching can be helpful for you in crafting your critical business and financial decisions. And not having a good grasp on the financial side of your company can lead you down the wrong road towards crashing your business straight into a deep ditch.
Business owners who excel have a growth strategy. Get a business coach who’s a financial growth expert you trust on your team to help you really understand your company from an opportunity perspective.
After you read my brief example below, answer this question. Does this confused business owner have a growth strategy?
My business coaching for you is you’re either growing or declining in business and there’s no such thing as status quo or equilibrium. So choose growth. You need to be actively pursuing a growth strategy at all times.
I attended an accounting seminar in Oakland, California, on Wednesday, and I want to share with you how getting stuck on erroneous beliefs about how you should make investments can be a train wreck for your profits.
“The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot
be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.”
- Leo Tolstoy 1897
The above quote is a perfect lead in to small business coaching by telling you about a man who had a glaring limiting belief about how to make financial investments. This particular gentleman at the seminar contradicted the speaker on several occasions when she gave very good advice. The financial expert’s name is Sandra.
Sandra’s advice in this instance was don’t pay cash for your long-term assets like business equipment. She said to everyone that you should finance or lease your investments instead. Here’s the reason. It’s that using cash when you shouldn’t’ can cause unexpected shortfalls in your cash flow months after you’ve spent your “doe.” Use your cash instead to hire an employee to operate the equipment you lease or purchase.
Well this gentleman was stuck on how it is better to save-up money to buy a piece of equipment for his business. I didn’t get his name or the name of his business. But he was really adamant about not paying any interest at all. His philosophy sounds good. Right?
And he led several other business people in Sandra’s financial training seminar astray with his “fearful mindset” because he was so emphatic about not paying interests and making monthly payments on a business loan. This guy’s idea does sound somewhat appealing. Right?
And since he was so unwilling to listen to Sandra’s small business coaching, he never learned why his belief is so terribly flawed.
Small Business Coaching Advice
Saving to make investments to avoid paying interest can lead you straight into bankruptcy court. Here’s where the gentleman is flawed in his thinking.
Let’s say that you want to buy a piece of equipment which is a $20,000 machine which will help you generate more business. And it takes you 40 months to save up to purchase the machinery.
To make it simple for the both of us, I’ll begin my small business coaching example at the beginning of the year. Starting January 1, 2011, each month you put $500 into an account for the purchase of this $20,000 device. So you will be able to purchase this contraption at the beginning of May, 2014. That’s 40 months times $500 equals $20,000. And let’s assume for simplicity sake you won’t be earning interests on your savings account.
Now here comes the flaw in this gentleman’s thinking. If you had financed the equipment on January 1, 2011, you would have been able to generate more sales during the 3.4 years it would have taken you to save for the purchase of the $20,000 equipment.
And now let’s say this $20,000 shiny gadget would have enabled your company to make an additional $200,000 increase in sales per year. Well because of your limiting financial belief that you should save up for buying your machine instead of financing your purchase, you would have lost the opportunity to earn more than $650,000 in cash.
And in three years and four months, the price of your apparatus probably would go up and the business opportunity to increase your sales may no longer be available to you because your competition will have locked down the market.
This story about limiting financial beliefs illustrates the power of small business coaching and how financing or leasing equipment at the point you identify the growth opportunity can help you grow your business faster and more profitably. Even if you were able to save the $20,000 in half the time by saving $1,000 per month instead of $500, you still would have lost a significant amount of money by not making the investment on January 1, 2011. And the amount of interest on the $20,000 loan to purchase your equipment would be minute in comparison to the income potential of making the purchase straightaway.
What Are the Financial Misconceptions Limiting Your Business Growth?
Again, my small business coaching for you is you’re either growing or declining in business and there’s no such thing as status quo or equilibrium. You need to be actively pursuing a growth strategy at all times.
Who do you rely on for small business coaching and great financial ideas?
I want to share this business owner’s story with you because I see how business owners and entrepreneurs get influenced by great sounding ideas about how to bootstrap their way into a venture or save to make investments, but they don’t consider the opportunity cost of capital. That is you could be generating greater profits right away through leveraging other people’s money.
Sign-up for a complementary Business Growth Opportunities coaching session to help you make better financial decisions for your company. I can help you:
- analyze your growth opportunities
- perform budget forecasting
- improve your business credit
- provide your best financing options
- and more…
It’s true that confused business owners really do pass up huge opportunities to earn thousands of dollars each year because they won’t listen to expert financial advice. Does that sound like you?
So you must face the tough realities in your business and maintain a growth mindset to be successful. And the SBA reports that 90% of businesses fail in the first five years. Remember, your business is either moving forward or falling back. There’s no such thing in business as status quo.
Check out my Business Growth Strategies Report for great ideas on how financing could help your company grow.
Your Small Small Business Coaching Growth Strategy Wake-up Call
Posted by: | CommentsSmall business coaching can be helpful for you in crafting critical business and financial decisions. And not having a good grasp on the financial side of your company can lead you down the wrong road towards crashing your business straight into a deep ditch.
Business owners who excel have a growth strategy. Get a business coach who’s a financial growth expert you trust on your team to help you really understand your company from an opportunity perspective.
After you read my brief example below, answer this question. Does this confused business owner have a growth strategy?
My business coaching for you is you’re either growing or declining in business and there’s no such thing as status quo or equilibrium. So choose growth. You need to be actively pursuing a growth strategy at all times.
I attended an accounting seminar in Oakland, California, on Wednesday, and I want to share with you how getting stuck on erroneous beliefs about how you should make investments can be a train wreck for your profits.
“The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.”
- Leo Tolstoy 1897
The above quote is a perfect lead in to small business coaching by telling you about a man who had a glaring limiting belief about how to make financial investments. This particular gentleman at the seminar contradicted the speaker on several occasions when she gave very good advice. The financial expert’s name is Sandra.
Sandra’s advice in this instance was don’t pay cash for long-term assets like business equipment. She said to everyone that you should finance or lease your investments instead. Here’s the reason. It’s that using cash when you shouldn’t’ can cause unexpected shortfalls in your cash flow months after you’ve spent your doe.
Well this gentleman was stuck on how it is better to save-up money to buy a piece of equipment for his business. I didn’t get his name or the name of his business. But he was really adamant about not paying any interest at all. His philosophy sounds good. Right?
And he led several other business people in Sandra’s financial training seminar astray with his fearful mindset because he was so emphatic about not paying interests and making monthly payments on a business loan. This guy’s idea does sound somewhat appealing. Right?
And since he was so unwilling to listen to Sandra’s small business coaching, he never learned why his belief is so terribly flawed.
Small Business Coaching Advice
Saving to make investments to avoid paying interest can lead you straight into bankruptcy court. Here’s where the gentleman is flawed in his thinking.
Let’s say that you want to buy a piece of equipment which is a $20,000 machine which will help you generate more business. And it takes you 40 months to save up to purchase the machinery.
To make it simple for the both of us, I’ll begin my small business coaching example at the beginning of the year. Starting January 1, 2011, each month you put $500 into an account for the purchase of this $20,000 device. So you will be able to purchase this contraption at the beginning of May, 2014. That’s 40 months times $500 equals $20,000. And let’s assume for simplicity sake you won’t be earning interests on your savings account.
Now here comes the flaw in this gentleman’s thinking. If you had financed the equipment on January 1, 2011, you would have been able to generate more sales during the 3.4 years it would have taken you to save for the purchase of the $20,000 equipment.
And now let’s say this $20,000 shiny gadget would have enabled your company to make an additional $200,000 increase in sales per year. Well because of your limiting financial belief that you should save up for buying your machine instead of financing your purchase, you would have lost the opportunity to earn more than $650,000 in cash.
And in three years and four months, the price of your apparatus probably would go up and the business opportunity to increase your sales may no longer be available to you because your competition will have locked down the market.
This story about limiting financial beliefs illustrates the power of small business coaching and how financing or leasing equipment at the point you identify the growth opportunity can help you grow your business faster and more profitably. Even if you were able to save the $20,000 in half the time by saving $1,000 per month instead of $500, you still would have lost a significant amount of money by not making the investment on January 1, 2011. And the amount of interest on the $20,000 loan to purchase your equipment would be minute in comparison to the income potential of making the purchase straightaway.
What Are the Financial Misconceptions Limiting Your Business Growth?
Again, my small business coaching for you is you’re either growing or declining in business and there’s no such thing as status quo or equilibrium. You need to be actively pursuing a growth strategy at all times.
Who do you rely on for small business coaching and great financial ideas?
I want to share this business owner’s story with you because I see how business owners and entrepreneurs get influenced by great sounding ideas about how to bootstrap their way into a venture or save to make investments, but they don’t consider the opportunity cost of capital. That is you could be generating greater profits right away through leveraging other people’s money.
Sign-up for a complementary Business Growth Opportunities coaching session to help you make better financial decisions for your company. I can help you:
- analyze your growth opportunities
- perform budget forecasting
- improve your business credit
- provide your best financing options
- and more…
It’s true that confused business owners really do pass up huge opportunities to earn thousands of dollars each year because they won’t listen to expert financial advice. Does that sound like you?
So you must face the tough realities in your business and maintain a growth mindset to be successful. And the SBA reports that 90% of businesses fail in the first five years. Remember, your business is either moving forward or falling back. There’s no such thing in business as status quo.
Check out my Business Growth Strategies Report for great ideas on how financing could help your company grow.
Avoid Negative Cash Flow With Budget Forecasting
Posted by: | CommentsBudgeting can help you avoid negative cash flow by helping you know when to hire personnel or purchase equipment. You know it isn’t good to have large swings up or down in your cash flow. Right? So you want to plan for investing events like these in advance so you forecast the months where your business will need debt financing or investor funding. And even possibly more money out of your own personal funds.
Now don’t get tricked into thinking because you’re a home-based business or a single person services company you don’t need to develop a realistic budget. Negative cash flow can be a crippling threat to your new venture. And you must craft ways to deal with it in advance.
No matter how small or large your company is, you still need to pay very close attention to this serious financial advice.
Cash Flow Projections Can Avoid Negative Cash Flow
Negative cash flow results when you spend more money during the month than what you generate (net income). When you prepare a budget in advance, you won’t be surprised by money being spent or investments you make that you were not anticipating.
Now what I’m recommending here you do is figure out when your business will run out of cash in the planning phase instead of when you’re in the middle of trying to execute on your business plan.
And conduct your strategic thinking by modeling your forecasts and adjusting your estimates in a spreadsheet. Not while you’re in the middle of a fire fight in running your business. This financial analysis process will help you analyze how your different business assumptions can drastically affect your need for capital and your timing when you should add staff like engineers, office managers, and administrative assistants.
Don’t just wing it and pray it’ll all work out for you.
Types of Budgeting
There are two types of budgets:
- Zero based budgeting
- Historical budgeting
Zero Based Budgeting
If you’re just starting out in business, then a zero based budget is what you’ll create first to anticipate periods of negative cash flow. Zero base means you don’t have any prior historical financial numbers to plug into your budget. So you need to figure out what will be your starting numbers. I’d be happy to talk with you about how to get realistic numbers for your start-up forecasts.
Your zero based budget will consist of three financial statements:
- Income statement — profit and loss or P&L (like a movie)
- Balance Sheet (snap shot)
- Cash flow statement (tells you what happen with your cash during the month)
Income Statement:
The income statement is like a movie of what happen in your business during the month. So you’ll have to estimate your sales, cost of goods sold (direct costs), marketing and sales expenses, and general an administrative expenses such as accounting, legal, and training (indirect costs).
Balance Sheet:
Second, create your balance sheet which is like a snap shot of your business at a moment in time. So you will craft a zero based balance sheet.
Assets:
You’ll budget for all your assets like cash, accounts receivables, inventory, furniture and equipment, etc.
Liabilities:
Now estimate your current and long-term liabilities like payroll, accounts payables, and long-term debt such as a business loan.
Equity:
Your owner’s equity will be the amount of your own funds you’ll give to your new venture.
Now your balance sheet has to balance. Right? So assets equals liabilities plus owners equity.
Cash Flow Statement:
Finally, you need to include a zero based cash flow statement. Your cash flow statement tells you what happened to your cash during the month based on changes in your balance sheet.
Here’s the time when you should be really concerned. And that is when your cash flow from operations is negative.
Now this is your zero based forecast. And you’ll only have to do this one time. So next year you’ll engage in historical budgeting.
Historical Budgeting
So that was all about zero based forecasting where you were starting out in your first year of business. It’ll help you predict months when you may experience negative cash flow. After the first year, you will be doing historical budgeting. This means You’ll begin with your financial statements from last year and plug them into your budget forecast.
Then you’ll increase any financial numbers where you believe you can grow your business like sales, inventory, equipment, personnel, accounts receivables, and accounts payable. And then update your personnel numbers to reflect new hires that will help you grow your sales.
Get Help With Budgeting
No matter how complex or simple your business, you need a budget to avoid negative cash flow. Because so many people today are looking at starting their own business, I’m afraid that many will be doomed before they start.
You can sign-up for my complementary Forecasting Your Budget consulting session. I will help you develop forecasts for your business which will help you budget everything you’ll need to be successful and steer your business through periods of negative cash from operations.
And your financial forecast will help you anticipate financing needs and pin point when you may need outside funding to avoid negative cash flow. You can review my Financing Strategies Report to understand if debt or equity financing will be necessary to successfully execute on your business plan.
Eye Opening Help With Debt Vs. Cash Business Decisions
Posted by: | CommentsI find it intriguing that many business owners need help with debt verses cash decisions because in this economy “cash is king.” The question I’m often asked by business owners is should I pay cash or finance the piece of equipment I want to purchase for my business? And some CEOs anxiously come to me saying I have extra cash this month. So should I use my cash to pay down my long-term debt?
Well the answer is most of the time a simple response. No. Keep your precious cash to take advantage of supplier discounts and fund strategic projects in your firm. You may need your cash to hire a new employee or pay for training costs which could make your staff more efficient. And a strategic project, lower inventory prices or service efficiencies, new employee, or better trained team in turn could dramatically lower your direct costs which would have a bigger positive impact on your company’s profitability.
You know that paying down long-term debt faster won’t improve your business profitability. Right? And using cash in this way has a negative impact on your cash position.
You need to first thoroughly understand your market and how supply and demand factors may shift from month to month and year over year in your markets before financing or spending cash. Macroeconomic conditions and microeconomics in your local market can be another factor which will influence your decision to finance or dole out cash. The current and future economic trends for sure play a role in my determinations as a financing professional to move forward with your funding request.
It is something I’d definitely include in my lending analysis before recommending you to a funding committee.
Now business debt includes current liabilities and long-term liabilities. I’m sure I don’t need to tell you that you must pay your current liabilities every month. Avoid late fees and take advantage of supplier discounts for paying early. Current liabilities include credit card payments, rent, workers compensation payments, etc.
But using cash to pay off long-term debt or to purchase equipment can be foolish. Hold onto your cash for more strategic purposes, to survive a temporary slow down in customer demand, and to take advantage of discounts from your suppliers.
Cash Flow Is King
As long as your cash flow from operations covers your principle and interests payments, you should leverage financing or lease equipment when possible.
Without getting too technical, you need to know whether outlaying a large sum of cash will throw your “current ratio” out of whack. So you need to make sure your “current ratio” stays align with industry standards and with your local market. The “current ratio” is what I use as your lender to measure your ability to pay off debt with your current assets.
Now another very important ratio I rely on to measure your ability to pay back debt on-time is the “debt to equity ratio.” This ratio helps me to verify how much “skin you have in the game” to pay back your current long-term debt and any future debt which would be added to your capital structure. Cash purchases and equity draws could put your business in a bind when it comes to future financing or investor capital, depending on the cash outlay and other debt on your balance sheet.
And just because your net income is positive and even substantial, you may not have the actual cash in reality. Yes, financial statement analysis is sometimes very tricky. For this reason, cash flow analysis is also another key step in deciding whether to payoff debt, purchase assets in cash, or finance or lease.
In short, I would say that before making large cash purchases or pay down long-term debt that you must perform financial and sensitivity analysis to know how using large sums of cash and/or signing on for additional debt financing will affect your immediate and near term business risks.
Why Do You Need Help With Debt Vs. Cash Decisions?
Well you don’t want to end up in a cash strapped position. Right? You know my financial company provides financing for equipment, commercial property, and business lines of credit. I can help you clarify your debt verses cash decisions.
Get expert advice. Sign-up for a complementary Help With Debt Vs. Cash Financing session with me today. And I will address your specific concerns with your debt verses cash decisions.
You can check out my complementary Business Survival Report which gives you an overview of the financing options you have as a business owner or commercial property investor.
Cash Flow Financing Doles Out Cold Cash Into Your Hand
Posted by: | CommentsIs cash flow financing the thing you need to get you over money shortages in your business? There may be serious reasons why you are short on cash, which I will discuss below. And I can help you snag some long over due money for your firm in seven business days or less.
Cash Flow Financing Tips
If you allow your customers flexible terms because they have the power to demand you wait for your money (the government or large company), then you need a cash flow financing solution to help you bring in cash to pay monthly expenses and your payroll. In the finance world we say that “rent and salaries don’t float.” And I’m sure nobody understands that better than you at this time.
Now you may have very good strategic reasons to allow your customers to pay slow. But it’s always best practice to review your accounts receivable process, policies, and procedures to do a better job in invoicing and staying on top of customer payments.
The first question I’d ask you is whether you know your fast paying clients verses your slow paying clients. Look at the relationship differences your company has with each group of clients: speedy verses unhurried in paying you. Is there something here about your accounts receivables policies you can restructure to shorten the amount of time your leisurely paying customers enjoy right now by holding onto your hard cash?
I ask this direct question because you want to base your cash flow financing request on customers who pay you in 15, 30, 45, and 60 days or more.
And do you track the date they were first invoice by your company and can you clearly show me how many days your customers are past due?
Cash flow loans like factoring, purchase order finance, and inventory finance are based primarily on your customer’s credit worthiness. That’s right, your company’s credit plays a very small role in whether you get the cash or not. And this type of financing is especially beneficial to start-ups and companies with virtually no assets to pledge to secure a loan.
You know what you’re doing in reality is extending credit to your late paying customers. So do they deserve an interest free loan from your “cash strapped” firm at this time? And have you performed a credit check recently or truly understand the viability of each firm you’re extending credit?
One huge value for you which comes with cash flow financing is that I can help you evaluate the credit worthiness of your customers you decide to include in your cash flow financing program.
Because in business as you already know things change for better or worse. And they can change very rapidly you know.
Get Back Into the Cash Flow
The one loan program that’s fueling businesses today is the cash flow loans. Get back into the money flow today with my Money Tree cash flow solutions. I will help you identify customers you want to pick for your financing solution and share all the fine points with you about my Money Tree cash programs.
Call me today to find out more about how my Money Tree cash flow program can help your situation. You can also sign-up for a complementary Money Tree Cash Flow consultation.
I will share with you all the best practices I know in helping you better structure and manage your business money flow.
Lenders Insist On Accrual Basis Accounting
Posted by: | CommentsAccrual Basis accounting is the only way to know where your business is on the profit measurement scale. Increase your profits and be more successful through financial accounting and best practices in accrual accounting. Business owners must match-up expenses and revenues so that you can accurately determine how much cash you have on hand for future investments. And accrual accounting is the best method for aligning your revenues with your expenses.
It’s not enough to know how much cash you have in your pocket right now. Lenders want to make sure you manage your accounts receivables effectively and pay your creditors on time.
How Does Accrual Basis Accounting Help Your Lender?
Well your lender wants to verify that your business makes enough money on a monthly basis to pay back your loan. By looking at your financial statements, lenders can quickly identify negative and positive financial trends in your business. Lenders are looking for good growth trends over the prior 12 to 24 months.
As lenders, the question we want answered is whether your business or commercial property produces enough cash on a monthly basis to pay back your loan. Your financial reports may indicate your business is profitable, but you may be cash poor. And it could be only a matter of time before your business runs out of cash and sputters to a dead stop.
If you’re in a cash strapped situation right now, a cash flow loan based on your accounts receivables may be the solution for you to help you rescue your business.
Two Critical Financial Functions to Manage In Your Business
The two main financial areas I want to make sure you oversee effectively in your business and with your commercial property is your accounts receivables and accounts payables.
Accounts Receivables:
Accounts receivables is the most important financial management function in your business to control. It’s about doing every thing you can do to ensure your customers are paying you on-time.
Accounts receivable best practice is critical to invoice your customers on a timely basis. Don’t wait until the end of the month to bill your customers. You may be surprised, but some business owners have a fear of invoicing their clients. If your industry allows it, invoice immediately. At minimum invoice on a weekly basis to improve your cash flow.
Train your customers to pay your invoices on-time.
For your commercial property tenants, you need to make sure you clearly communicate in writing your policies on when your tenant must pay the rent and other expenses that your tenant is responsible for paying. If your tenants don’t pay you on-time, then you can’t pay your lender as promised.
Accrual Basis accounting says that you recognize the revenue at the time you complete the work or deliver the product verses when you receive the cash from your customer.
Accounts Payables:
Accounts payable should be consistent. Align your money coming in with your money going out. Remember that “rent and payroll don’t float.” And you must pay your bills the same time every month to avoid late fees on credit cards for example.
You are the main controller in your company. Do you review every bill that comes into your company or do you simply hand off this task to your bookkeeper? It would be a mistake on your part to hand over your bills or bank statements to your bookkeeper without first approving each invoice from your creditors or correspondence from your bank.
And banks do make mistakes. You need to verify accuracy of charges and deposits. And you can’t expect your bookkeeper to know the intimate details of your business.
Accrual Basis accounting requires that you recognize expenses at the time the expense is incurred whether you have actually paid the expense or not.
Financial Analysis
Accrual accounting is the only accounting method which allows you to perform financial analysis. You can compare your performance to prior periods like comparing the current quarter to the same time period last year.
Financial analysis is always performed on a loan or refinance based on the accrual basis because your lender wants to be able to compare your books with similar businesses in the same industry.
At any moment and time in your business, you’ll be able to know where you stand in terms of profitability. You will have the control you need to make wise business decisions based on accurate financial information. You’ll know where to cut costs and where you should invest, which means you need to look at your financial reports on a regular basis.
Get Aligned With Your Business Performance
If you don’t understand the process, procedures, and software applications involved with accrual accounting, then you need to get help immediately. Accurate and timely financial accounting is about business survival.
You need to get a copy of my Business Survival Report right now to better understand the things you need to do for tracking your revenues and expenses effectively so you can get commercial finance for your business or a commercial property loan when you need it.
The other thing I recommend for you is to sign-up for my Financial Management Tune-Up consulting session. I’ll share with you my best practices and the step-by-step processes I recommend to better manage and get a good handle on your revenues and expenses in your business through accrual accounting.
Positive Affirmations Crack Hard Turtle Shells
Posted by: | CommentsPositive affirmations can protect you from negative phone calls and keep you from getting “stuck” in a downward spiral. I returned a call to a friend on Friday who had left me a voicemail a few days before. And his name is Bruce. You’ll get why he’s like a turtle in a second.
You know I typically don’t take personal calls during the day. But in this case I was cleaning up my office and decided to crack two “turtles with one stone.”
Hello Bruce,
How’s it going? “Their saying the economy was worse than they had previously stated.” Right off the bat, Bruce was spewing out negative thoughts.
I was like oh boy, here we go again. Bruce went on to tell me about a couple who purchased ten rentals in Los Vegas during the last real estate boom in the U.S and how his wife spent last weekend with the wife of the real estate couple.
He said “I ask my wife, did you ask them what happened to those ten houses? They were so smart back then but now look at them.” Bruce’s wife said “no I didn’t ask them that. That would have been rude.” Bruce said “I would have asked them. Because I bet they don’t have them anymore.” What a grumpy dude.
Let me just list a few of Bruce’s comments here to illustrate the point I want to make.
- Who’s going to hire a 50 year old man like me?
- If you aren’t a government worker or have a government pension then you’re not doing well in this economy
- My wife looks at me as if I’m a bum because my business is failing and I can’t find a job
- Who do you know that’s doing well right now?
I probably don’t have to tell you. The rest of my day was mostly unproductive. Truth be told, I had to take a nap after listening to Bruce’s negative junk. His crappy attitude really did affect me in the worse kind of way.
When I woke-up, I realized that the negative things he was saying was the first thing on my mind. And I quickly reminded myself that I don’t accept personal phone calls during the day, especially from Bruce. So I immediately began my success ritual to change my state of mind. You know you must fight for the state of mind you want to create for your business and life through positive affirmations.
Positive Affirmations Protect Your State of Being
I realize the reason Bruce rants on and on about how bad things are right now. He’s constructing protective walls like a turtle’s shell with the negative affirmations he makes so he has excuses for his lack of direction and action. Anytime something doesn’t go right or he fails, he can say it didn’t go his way because of the economy. But in reality, the conditions in the economy may have nothing to do with his failures.
Does this sound familiar in any way to you?
Now Bruce’s wife Pandora and kids have a very high “burn rate”, which means they like spending money on the latest gadgets, fashions, and eateries. And he says that his savings are dwindling fast.
When all his money is gone, Bruce will have constructed the story or built the “shell of excuses” around him before his “Rome” falls: It’s not my fault. It’s the government’s fault. It’s those crooks in Washington. They did it. They screwed the country.
Bruce Is Stuck
My point is when you don’t take responsibility for what happens in your life you dig a deeper whole for yourself. You can’t clearly evaluate results in your life and make good judgments if you play the blame game on the government or corporate greed.
Do you understand the nasty plot now? And it’s not pretty for anyone who chooses to give in like my friend Bruce. Now It’s almost impossible for Bruce to do the challenging work of figuring out what he can do next to move his life in a positive direction because he’s focused on things which are literally out of his control.
He’s “stuck.” And he’s not coachable either. And he creates his environment where “stuck” seems only logical. He constantly makes affirmations to keep himself focused on his negative goal of being “stuck”. But Bruce would probably say he’s closer to something which rimes with “stuck.” That’s right; goals can be negative or positive. And not actively setting positive goals can mean you’re allowing negative goals to get set for you.
Bruce has emotionally set-up conditions which justifies his lack of action. So his daily focus now is to validate or prove he’s right.
Then he watches the news everyday to find evidence he’s right about the fact that he has no control over being stuck. And there’s plenty of evidence to support his case. So there’s no reason for him to take action towards a positive goal you know.
Bruce constantly looks for corroborating evidence with his wife’s friends, his friends, and just wherever he can grab onto the facts to prove that he’s justified in taking no action.
Because if he took positive actions towards assessing viable options for making money, then he’d disprove his hypothesis that there’re no jobs out there or ways to make money in a business venture. Now he’s painted himself into a corner, which is going to be difficult for him to fight his way out of his hard “shell.”
We all do what Bruce does to a certain extent because it’s comfortable staying with in our protective “shells” like turtles. It seems like the easy thing to do which is to go and hide out if you will.
When we adopt this kind of mindset, we shut out viable opportunities because we can’t see them through our “shell.” And the downward spiral begins. It’s because we’re only looking to affirm our hypothesis. We set-up the emotional conditions to support our case and then find the facts to support it.
You know Bruce is able to find plenty of data points out there to prove his hypothesis that he can’t make money anymore. Right?
But I can find lots of proof points today to show Bruce’s hypothesis isn’t true as well.
Rely On Positive Affirmations to Change Your State of Mind
The only thing Bruce has control over all the negative excuses that Bruce brings up is his state of being. You need a daily success ritual to get you focused on opportunities and the positive side of things. So make a decision to focus on what’s positive right now. Then develop plans to win in this economy based on what you see as positive.
Don’t allow yourself to get “stuck” like Bruce in a negative emotional state where you just look for the facts to support your negative hypothesis. Because the evidence is there to support whatever you decide to focus on.
So here’s my formula for you. Leverage your past successes to get you into a winning state of mind. Relive times in your life when you overcame huge obstacles in your way. See what you saw at the time. Hear what the people around you were saying.
And most importantly, feel what you felt at the point when you were powerful. Stand the way you stood with the same smile you had on your face at the time.
Think of an occasion when you had completed a project or won a successful negotiation. Fully relive your experience in all of its glory.
Break Out of Your Shell
For a copy of my positive affirmations to help you get into massive action, email me and I will forward you my daily “shell” cracking success affirmations.
I offer two complementary coaching sessions per month. It’s always first come, first served. so get signed up right away.
And you know you can sign-up right now for a complementary Break Out of Your Shell coaching session with me to get more help on how to change your state and get moving and creating success in your business and life.
