Do you ever read cash flow articles to learn how to improve your cash flow?

If you do, beware of the advice you read! Most articles have "common knowledge" lists that are often bad decisions for many businesses! There is usually a final recommendation that directly relates to something that the author is selling.

Worst of all, the fixes are usually cosmetic but don't dig down into fundamental profitability.

If you want to fix YOUR cash flow, I suggest the following to start:

1. List all of the issues that you know are causing your problems
2. Start fixing the biggest problem and the easiest problem to fix at the same time.
   - Fixing the easiest problem will give you momentum
   - Fixing the biggest problem will help you the most
   
   Here is the key issue: Are you fixing the underlying problems or just the symptoms?
   
   If you are just fixing symptoms, you will have the problem over and over again.
   
   Any thoughts?

   E-mail me your comments at [email protected]

“Automation applied to an inefficient operation will magnify the inefficiency.” 

- Bill Gates

I am constantly asked, "What software do you use to implement cash flow management?"

My answer: "I start with an Excel model."

Usually, people are surprised and even disappointed. They want to believe that there is a "silver bullet" that magically picks up their accounting data and will automatically tell them how to improve their cash flow.

It just doesn't work that way.

Why? Because....

Most companies have a very inefficient operation when it comes to managing their cash flow.

Building out an Excel model becomes a conversation about how all the pieces of cash moving into and out of the company fall into place.

After you understand the movement then you can automate the model.

Do you use automation in your business? I'd love to know how, and if it took some time to make it efficient.

Let me know in the comments below!

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

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.

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

Link to original podcast page

When you are looking to fix your cash management issues, don’t just look at the symptom. If you don’t dig past the symptoms you are seeing at the surface of a problem, you probably don’t know what your real problem is.

Most of the time when I am asked to come in and resolve issues, I am asked to fix the symptoms of a business’s troubles.

• “I need good job descriptions, so the business runs smoother.”
• “Help me get a loan so I have more capital.”
• “I have a lot of profits. Help me find more cash.”
• “Would you be my part-time CFO, so I can get my finances organized and we can grow again?”

People don’t realize that the symptoms they see and keep them awake at night, are not the real issues that need to be fixed. They try to get rid of the immediate pain and often try short-cuts that do more harm than good.

When I was Leaking Water instead of Cash

Let me tell you a quick story that will give you a better idea...