A line of credit (a.k.a. a revolving line of credit, or a revolver) can be a very useful form of financing for many businesses.  Think of it as a credit card, but one that is more nuanced that has some pluses and minuses that need to be taken into account.  If you are wondering if…

Last week, we toured the left-hand side of the balance sheet, a.k.a. the assets.  This week, we will review liabilities and discuss the pitfalls and minefields that need to be avoided.   The right side of the balance sheet starts out with current liabilities- those that are expected to be repaid within a year.  All…

I am going to attempt to get a little more academic, yet keep it interesting enough that people don’t fall asleep.   In very simple terms, the balance sheet provides a summary of the assets, liabilities, and equity of a business at a given point in time.   Why is this important?  The balance sheet…

There have been many articles written about the pros and cons of doing business with family and friends.  One of the most important things people should consider before entering into a business arrangement with friends or family is what will they do if they find themselves having to make a choice between friendship / family…

  When it comes time to review financial statements, the implicit expectation is to always look at the income statement (and only the income statement).  Everyone wants to know the sales and whether the company made any money (i.e. profits) for a given period.  It’s not that the income statement does not provide useful information…

  Step 1:  DON’T   Step 2: See Step 1   Before I go into some more detail, let me clarify what I mean by managing a pile of held checks.  I consider held checks to mean anything that is printed and then not mailed prior to conducting the next check run.  Typically, this is…

For many business owners the company’s cash balance is whatever number they see when they log into their bank account or open the mail to look at the monthly statement.  This may not always provide an accurate picture of the company’s cash true position.  For EVERY organization, virtually all transactions with outsiders are done with…

  Is there anyone in your firm that can tell you what the breakeven point is?  If so, can they tell you how it is trending?  It’s not the end of the world if you don’t know it, but it can be insightful in providing a better understanding of the business.   The breakeven point…

As we are nearing the end of the fourth quarter, this is usually prime budgeting time for most companies.  Many firms  have already put together a forecast for next year, but perhaps there are reasons to review, update and modify closer to year end.  Forecasts can be done for internal use (management, Board of Directors)…

Image by NY Photographic via The Blue Diamond Gallery   For small business owners, the decisions on how to handle payroll can have long lasting implications for the company.  If there are any errors, even small ones, they can accumulate over time.  It’s like a small leak in a roof, by the time it is…