A by cathy.

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I am Cathy. I am a Certified Public Accountant and a business consultant for years. I want to share my expertise thru this blog which is intended to help people who are planning or who are already in business. The topics range from Accounting for Small Business, Cash Management, Inventory Management, Assets Management and Financing. The terminologies will be simplified for laymen and business jargons will be explained for clarity.

Saturday, January 05, 2008


The success of a small business greatly depends on efficient cash flow management.

When I talk about cash flow here, I am referring to the movement of cash from the collections to the payments and the maintenance of a "safe" cash balance for operation.

So small businessmen should analyze the cash flow of the businessmen. One
does not need to be an accountant to do that. A working knowledge of where
the cash comes from and where the cash goes are all what the businessmen need.

This means understanding the components of business that affect the movements
of cash like:

1. Accounts receivable-

How long does the company collect its receivable? What are the terms of sales?
n/30 days? n/60 days?

The next question is what's the actual collection period? Is it really after
30 days or more than that? Is it really 60 days or it stretches out to 60 or

The next question is why the prolonged collection period?

With this question in mind, another set of questions should be answered.

1. Does the business send the invoice promptly?

There are businesses where invoice or statement is sent only upon the delivery
of services. But as to how long it is done depends on the person in charge of the billing.

Sometimes, the billing is delayed due to incomplete data or miscommunication
between people in the organization.

The problem could lie on the inefficient record keeping of the business.When
the billing comes, the person in charge of this function has no basis for
the charges.

2. Do the business make follow up of the collection?

It is not enough to send the statement or the bill. The business has to
make sure that it was received and a payment is being prepared.

3. Does the business continue to render service to delinquent clients/
If it does, it's time to review the accounts of this client.

More about accounts receivables in the next blogs.

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Friday, January 04, 2008

Handling Cash Expenses

My friend is complaining that he can not organize his receipts and monitor his expenses especially those which were not paid thru check--little expenses that when summed up together will make a dent on the profit like, office supplies bought in cash, taxi fare and other petty expenses.

I come across this website shoeboxed which offers organization of receipts for free.

Precisely, that's what I suggested to my friend who has his day job to attend to while managing his on-line business--a box-type of organizing his docs while waiting to be sorted out. Instead of a box however, there is an expandable folder/envelope which come with labels which he can use to store the receipts, notes and other small papers evidencing payments.

To handle the cash expenses, he can make use of a small box where he can put a fixed amount of money, say for example $ 100.00. Everytime, he spends out of the fund, he should put back the change, a receipt of a small paper noting what kind of expense it is. When the fund is running low, say for example, it is only 15.00, he can replenish the fund by adding $ 85.00 to make it $ 100 again.

The 85.00 represents the expenses for the period that can be itemized as follows:

20.00 taxi fare- Transportation Expense
35.00 bond paper and paper clips - Office Supplies
30.00 parking fee penalty - miscellaneous

If you have question, you can post in the comment.