Accounting for Bad Debts

One of the unfortunate issues that companies need to deal with at year-end is accounting for bad debts. Bad debts are not an issue for a company that operates on a cash basis; if you haven’t collected the money, then it isn’t included in your income. For companies that keep their books on an accrual basis, however, it is an important part of their year-end process, since you book your revenue as it occurs or is billed out, not when you receive payment. Read More »

Tags: Accounting For Bad Debts, Accounts Receivable Aging Report, Accrual Basis, Allowance Account, Attempts, Bad Debt, Bad Debts Expense, Balance Sheet, Cash Basis, Documentation, Expense Account, Income Statement, Invoices, Irs, Money, Net Income, Receivables, True Expectations, Year End

5 Tips for Calming 401k Fears

When the market plunges, employees can begin to become fearful about losing money in their 401k funds. Because it is a key point of interest at this time, it becomes the perfect time to re-educate your employees about how their 401k works and the parts the employer does and does not play in the process. Here are five tips for calming 401k fears in the workplace. Read More »

Tags: 401k Funds, Amp, Daily Basis, Different Companies, Education, Fears, Flood, Hr Department, Invest, Investment Advice, Key Point, Losses, Money, Payroll, Perfect Time, Plan Administrator, Point Of Interest, Spite

Save Money by Reviewing Vendor Statements

If you’re paying the balance due on your vendor invoices and statements with the assumption that they have billed you correctly, you may be costing yourself money without knowing it.

This is not to imply that your vendors may be dishonest or trying to cheat you in any way. It simply is based upon the fact that people do make mistakes. That is why it is important to review both individual invoices and monthly statements as they come in.
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Tags: Assumption, Business Owners, Fact That People, Finance Charge, Finance Charges, Invoice Numbers, Money, Monthly Statements, Neglect, Price Reductions, Vendor Invoices, Vendor Statements

My Income Statement Says I Made a Profit But My Bank Account is Empty. Where’d it go?

The answer to this will be a little bit different depending on whether your books are being kept on an accrual basis or a cash basis. For this article we will assume you are keeping your books on a cash basis.

Simply put, cash basis accounting works like this: income is recognized when the cash comes in and expenses are recorded when they are paid. So, theoretically, the final balance in your checkbook at the end of the year would be the amount of profit you made for the year. So, where did the money go if your profit is greater than your bank balance?

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Tags: Accrual Basis, Asset Purchases, Assets, Bank Balance, Books, Cash Basis Accounting, Checkbook, Company Expenses, Culprit, Doing Business, Income Statement, Little Bit, Money, Office Furniture, Personal Expenditures, Profits, Real Estate

Sunk Costs and Costly Decisions

Want to know why some people lose so frequently at poker? It’s not because they’re unlucky. It’s because they’ll often add chips to the pot generously during the early bets while they’re figuring out if they have a good enough hand to play… but by the time they realize they DON’T have a good enough hand to play, they feel that they’ve paid so much already, they should keep playing just in case (even though the odds of winning are now largely stacked against them).

This happens in business, too. A business owner will invest in something (a tool, a piece of software, an employee, or a new asset, just to name a few) in order to help their business. Things go well for a while, but sooner or later that thing is no longer useful, but the entrepreneur keeps using it because they feel that they’ve paid for it so they should try to derive as much value as they can out of it.

Although it’s a common practice, it’s a mistake… and it’s often a costly one.
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Tags: Bets, Business Owner, Chips, Costly Decision, Costly Decisions, Entrepreneur, Mistake, Money, Odds, Poker, Pot, Resale Value