Right now I am teaching a personal financial planning course. It is a little outside of my areas of expertise so I brought in 2 guest lecturers. My students learned a lot from people in the finance industry as they teach outside of the textbook and more about real-world examples and application. The biggest lesson [...]

This time of year we are busy scurrying to complete holiday shopping, which could include gifts for your employees. The decision to pay bonuses or provide a gift requires careful analysis of the year-to-date results, promises/expectations of employees, and your cash position. Unlike the purchase of machinery or equipment, these payments do not return a [...]

As we approach the last month of the year many businesses are in the middle of planning and preparing for a new year. One of the most common planning tools is a budget. For some tips about how to create a budget refer to Budgeting: Are You Doing It? and Year End Budgets. These posts [...]

Supply and demand are two keys that drive business. While these are more economic principles than accounting topics, we use these concepts in budgeting and planning. Even if a small business owner doesn’t prepare a yearly budget, they most likely have calculated the break-even point. The break-even point tells us how many units we need [...]

Accounting is like a foreign language. The terminology is sometime intuitive and other times very challenging. My students spend the first few classes learning the differences between an asset and a liability as well as debits and credits. They are almost always confused why a debit increases cash and a credit decreases cash because the [...]

A cash budget is more than a summary of your expected cash inflows and outflows. It is a planning tool for making sure you have cash to pay for daily operations, cash to pay for emergencies and determine the amount remaining for growth opportunities. In order to complete a cash budget you need a few [...]

When you create a sales budget (aka sales projection or sales forecast) you are only completing a portion of the budgeting process. Generally, your sales should drive your expenses; however, on occasion you might base your sales projections on how much you need to sell to cover your expenses. The sales budget is the driver [...]

What does your cash flow look like right now? Are you still worried about the economy? Have you been putting off purchases or hiring a new employee because cash is a little tight? What about that new computer you need because the one you are using is 2-3 years old? A friend of mine recently [...]

Financing is typically divided into two different categories, Debt Financing and Equity Financing. Understanding the different financing options is a critical step in a company’s financial planning strategy. Debt Financing involves borrowing money that will be paid back over time. The debt can be short term (less than one year) or long term (more than [...]

You need some new equipment or an new vehicle for your business. Do you lease or buy? The last blog post discussed the pros to leasing, which can be attractive when you don’t have idle cash available to make a down payment or the risk of obsolescence is high (i.e., when technology changes fast). It [...]