When business owners need to cut costs one of the first expenses they consider are salaries. But reducing your staff size isn’t always the best answer even though it can create immediate cash savings. Below is an interview with Eric of Gnosis Arts who decided to increase prices as a way to generate more cash [...]

Every time I teach an Intro to Financial Accounting course my students get lost on the concepts of debits and credits. For many of the students this is their first foray into accounting outside of their debit cards. They view debits and credits as negative and positive, respectively. The words debit and credit have Latin [...]

With my blog I am trying to convince business owners to use their accounting data to make business decisions. There are many reasons to use you accounting information on a regular basis, preferably monthly. In addition, there are many different ways to use the data. Accounting data can be used to: 1. Determine how liquid [...]

In my last blog post we discussed why you should read and analyze your Balance Sheet. Now we’ll discuss how to use it in your business. Each month you should compare your current Balance Sheet to the prior month and to the prior year the same month. How does the current Balance Sheet compare? Hopefully [...]

How often do you review your Balance Sheet? Is it monthly, quarterly, yearly or never? The Balance Sheet is the ugly stepsister to the Income Statement. Every business owner wants to know how much money they have in the bank. They may even review the Income Statement and perform ratio analysis to gain more information [...]

Once you have the Income Statement prepared, see The Income Statement: How to Read it post, it is time to compare your results from the current month to the prior month. Using the same logic, compare your current results to the same month of the prior year. In what areas did your business improve? What [...]

Many business owners follow the motto that “cash is king.” And while cash is extremely important, the ending balance in your bank account does not tell you much about how you generated or used cash. Looking only at your cash balance may cause you to miss some key indicators on how your business is doing. [...]

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 [...]