• Do You Hear Something Dripping?

    | Categories: Cash flow , Cash Management , Profit First , Revenue

    Blog by Fuel Accountants

        Ok, has this guy gone off his rocker? Now he’s asking me if I hear dripping? Yes, I am asking that.  But let me explain: We have run into situations where our clients have periods of high revenue, followed by periods of lower revenue. They are doing nothing wrong. It’s just that some businesses have a natural flow of revenue that roller coasters, depending on the calendar. We call that seasonality. And if that is the case with your business, then pay attention to this article!! Do you remember the story of the grasshopper and the ants? The grasshopper lived day-to-day, while the…

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  • How should I handle credit cards in Profit First?

    | Categories: Business Tips , Cash Management , Credit Card , Debt , Organized Financial System , Profit First

    Blog by Fuel Accountants

      Credit cards make paying for things pretty darn convenient. Sometimes a little too convenient. It’s important to manage your spending habits and remember that we are all in this FOR THE PROFIT. That’s right. Profit comes first, not last. One of the core principles of Profit Fist is that debt is bad. Credit card debt is the most common form of debt businesses have. So are we suggesting you burn your credit cards? Heavens no. It just means that we have to be deliberate about how they are used.  Credit cards can significantly help improve cash flow, earn reward points, and…

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  • Direct Materials and Subcontractors, COGS or OPEX?

    | Categories: Business Tips , Cash Management , Contractors , Profit First

    Blog by Fuel Accountants

    Having a great relationship with your material vendors and subcontractors is critical, especially as your business transitions and grows over time. Making sure they are paid on time is an important part of maintaining those relationships. So we want to show you how to manage your cash flow using our Profit First Cash Management System (PFCMS). Direct Materials: When implementing Profit First , it is important to distinguish between materials used to produce your customer products or projects, and non-direct materials used more generally in your business. We treat the two differently for very important reasons. Direct materials expense always follows the volume…

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  • Have you started using the Profit First Cash Management System yet?

    | Categories: Building Strategy , Cash Management , Future Financial Planning , Profit First

    Blog by Fuel Accountants

      What are you waiting for? For those of you not yet familiar with our Profit First Cash Management System (PFCMS), it gives you the opportunity of taking charge of your cash and profitability.  We use Profit First in our practice, and many of our clients use it as well. It works amazingly great… If you’re not yet using it, call us to get more info. It involves setting up several bank accounts where your revenue is apportioned into on a consistent basis in order to make certain that you have the right amount of cash, in the right place, at the right time. When…

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  • How many bank accounts do I really need?

    | Categories: Business Coaching , Cash Management , Profit First

    Blog by Fuel Accountants

    Wait What? Am I telling you that you need more than one bank account? Yes, I am!! Remember how our grandparents did finances? The paycheck got cashed, and the money came home and was put into separate envelopes: Rent, Food, Clothing, etc. Well, this same idea can be employed in your business. We help our clients set this up into what we call our Profit First Cash Management System (PFCMS). As money comes in, it gets allocated to various business accounts. The point is to have the right amount of cash in the right place, at the right time. In the basic system…

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  • How to Become Your Own Bank Lender

    | Categories: Cash Management , Profit First

    Blog by Fuel Accountants

        Did you see the article about bank financing? If not, go back and read it, please. Ok, are you back now? Great!! Let’s talk turkey (which is appropriate to do since we recently celebrated Thanksgiving). Dealing with banks can be challenging. It seems like they are always willing to lend us money when we don’t need it. And that’s why it’s important to have a good relationship with a commercial lender. So when you need it, you already know each other. But what if you could become your very own lender? Is that even possible, or am I delusional? No, it’s really possible in…

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  • So you think you need to borrow some money?

    | Categories: Business Growth , Business Tips , Cash flow , Cash Management , Profit First Coaching

    Blog by Fuel Accountants

      We are debt averse in general. Borrowing money should be the choice of last resort, not first. But there are times where capital is needed and the business does not have sufficient time to generate the capital needed through its regular operations. In that case, borrowing might be useful. But you’d better have a good reason to go down this road. There are several reasons to borrow money: Business expansion There are two aspects to business expansion:  Asset Acquisition: Sometimes when we expand the business we need to buy some assets like equipment, computers, etc.  Working Capital needs: When your business grows, your working capital needs to grow…

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  • How much should you pay yourself?

    | Categories: Cash Management , Profit First

    Blog by Fuel Accountants

    Great question!! And it can be a complex one too… There are two considerations that must be factored in: 1. What are you worth as an employee of your company?  If you needed to hire someone to do all the work you do, how much would you have to pay them? I’m certain it would not be minimum wage, right? You provide much more value than that.  But this is an important question to consider. You deserve to get paid the same or more than you would pay an outside person to do your work. We call that economic compensation. 2. How do I optimize…

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  • Amortzing Prepaid Expenses over the year

    | Categories: Business Tips , Cash Management , Cashflow , Expenses

    Blog by Fuel Accountants

    Sometimes it’s cheaper (or you have no choice) to pay for recurring expenses (such as insurance or software subscriptions annually rather than monthly.  Now this can mess up your cash flow a bit, but if you plan it right you can get both the savings and a smooth cash flow (see my Top 10 Tips to Save Money on your Software Subscriptions article). A question we often get asked is “how do I get my accounting system to spread the expense out over the year even though I pay once a year?” Here are the steps to do this in Xero (you can…

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  • Is Your E-Commerce Business Profitable?

    | Categories: advertising , Business Coaching , Business Tips , Cash Management , E-Commerce , Inventory

    Blog by Fuel Accountants

    Well, is it? If you are struggling a little with that let’s talk about how to turn that around. Online businesses have two main challenges: Inventory Management Promotion/advertising Management Really both of these areas stem from the same core problem. What’s that you say? Allright, I’ll just say it again. In order to have a successful online business, you only need to solve one problem. What is that one problem? Cash Management! So what are you thinking at this point? You probably want to ask, “Ok smarty pants, why do you think that’s the problem?” Fine, I’ll tell you… Inventory Management What is the definition of inventory? Most…

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  • Does Reviewing Your Financials Sound Really Intimidating?

    | Categories: Building Strategy , Business Coaching , Business Tips , Cash Management , Future Financial Planning , Profit First

    Blog by Fuel Accountants

      It’s ok, you can be totally honest with me. And I will be honest with you, too.  Most business owners hardly ever look at their financials. There are several reasons for that: The financials are not very accurate It’s difficult to read the financials because they are so messy looking It’s difficult to understand how those financial results ended up on the financials The info on the financials is too old to be useful How in the world can you implement our Profit First Cash Management System (PFCMS) without accurate financials? Answer: It’s almost impossible.  Let’s look at your financials one by one. You good with that? Let’s…

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  • Why is it so Expensive to grow? (How to use PFCMS as a Strategic Planning Tool)

    | Categories: Business Tips , Cash Management , Future Financial Planning , Profit First

    Blog by Fuel Accountants

    Have you ever thought about this? When your business grows, cash can become strained. Why is that? Great question. That shows your interest is piqued!!   The answer is actually quite simple. When your business grows you need additional working capital. Think about that for a moment. When you hire additional employees, expand your inventory to accommodate more sales, buy additional technology or add licenses. Hey, it all adds up!! So now what do you do? Hmmm… All these things require additional funding. And more revenue doesn’t always provide enough cash flow to fund it when needed.  First and foremost, it’s not like birthday…

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  • Who wants game changing business advice that will 100% guarantee that your business is profitable?

    | Categories: Profit , Building Strategy , Business Growth , Business Tips , Cash Management , Profit First

    Blog by Fuel Accountants

    Did I just get your attention? I’m very glad I did!! So by now you’re asking how in the world can I make such a bold claim. I can absolutely guarantee it. How? By implementing our “Profit First Cash Management System (PFCMS)". Have you heard of Profit First? Our friend (yes, he’s our friend) Mike Michalowicz wrote a book a few years ago called “Profit First.” I first became acquainted with Mike at a conference several years ago. I was so enthralled with his presentation that I immediately bought and read his book. Then I called up his office to see what…

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