Tag: ACCOUNTING

Accounts Receivable and Cash Flow: The Financial Love Story

March 12, 2025by Anna FaulkLeave a comment

Accounts receivable (AR) and cash flow are two essential pieces in a business’s financial puzzle, but let’s be honest—they sometimes act more like a mismatched couple trying to figure things out. AR is all about patiently waiting for clients to pay up, while cash flow has no time for nonsense and just wants to keep the bank account full and happy. Here’s a humorous look at how these two frenemies work together to keep the business running smoothly.

Accounts Receivable: The Optimistic (and Slightly Naïve) Romantic 🌈💌

Accounts receivable is that friend who’s constantly loaning you $20 with a cheerful, “Just pay me back whenever!”

It represents the money your customers owe you for products or services they haven’t quite paid for yet. AR is like a hopeful romantic, always expecting clients will keep their promises to pay on time… eventually.

AR’s Motto: “I know they’ll pay soon! I mean, they said they would, and I trust them!” 😇

Why We Love AR: It boosts your company’s value by promising a steady stream of incoming funds… someday.

Biggest Weakness: Sometimes, it’s a little too trusting. It counts as an asset on the balance sheet, but if customers drag their feet paying, your cash flow might feel like it’s auditioning for a survival show.

Cash Flow: The No-Nonsense Realist 🚀💵

Cash flow, on the other hand, is that practical friend who’s all about action. Cash flow doesn’t believe in “eventually.” It’s the money moving in and out of your business, keeping the lights on and the rent paid. Think of cash flow as the “let’s get this done” type—focused, efficient, and slightly annoyed that AR is always so, well… hopeful.

Cash Flow’s Motto: “I’ll believe it when I see it in the bank account.” 💳

Why We Love Cash Flow: Positive cash flow means the business has enough money to cover expenses, invest in growth, and avoid borrowing. It’s the steady, reliable friend who keeps things together.

Biggest Weakness: Cash flow isn’t very patient. It gets nervous when too much money is tied up in AR, constantly reminding AR, “Good vibes don’t pay the bills!”

The Clash (and Cooperation) Between AR and Cash Flow 🤝🔥

AR and cash flow have a classic push-pull relationship, with AR wanting to “believe in people” and cash flow saying, “That’s great, but how about we get paid already?” If customers delay payment, cash flow gets grumpy, even though AR insists the check is “definitely in the mail.”

Here’s how AR and cash flow work together when they’re not driving each other crazy:

Cash Flow Timing Delayed payments from AR can lead to cash flow headaches. Cash flow needs to buy groceries now, not next month!

Collection Strategies: With a strong collections policy (automated reminders, anyone?), AR can keep cash flow happy by bringing in cash more regularly.

Cash Flow Forecasting: Cash flow relies on AR for an accurate picture of future income. This way, it doesn’t get blindsided when there’s less cash in the account than expected. It’s like planning a party when AR actually RSVPs on time!

Tricks to Keep AR and Cash Flow in Harmony 🎩💡

1. Send Invoices Like You Mean It: The sooner you invoice, the sooner AR can give cash flow the boost it needs. And yes, that means no “gently nudging”—let’s make those invoices clear, assertive, and friendly.

2. Set “Encouraging” Payment Terms: Clear payment terms are your best friend. Offer a discount for early payments, or (politely) hint at late fees if customers take their sweet time.

3. Use Automated Reminders (Cash Flow’s Favorite): AR might feel a little awkward nagging customers, so let an automated reminder system handle it. This way, cash flow doesn’t lose sleep over unpaid invoices.

4. Consider AR Financing: AR can occasionally fast-track cash flow by using AR financing or factoring (where you get an advance on AR, but with a slight fee). Cash flow loves this idea—as long as you don’t overdo it!

The Happily-Ever-After

When accounts receivable and cash flow finally learn to work in harmony, it’s a beautiful thing. By actively managing AR, businesses can boost cash flow, avoid emergency “cash shortage” panics, and focus on growing with confidence. Remember: AR might be a dreamer, but cash flow is the real deal—keep both in check, and your finances will live happily ever after.

How to Prepare and File Quarterly Payroll Reports

August 16, 2023August 16, 2023by Anna FaulkLeave a comment

Every quarter, small business owners must submit payroll reports to their state and the Internal Revenue Service (IRS). These reports are essential for keeping accurate records of employee salaries, wages, and taxes. In this blog post, we will discuss the information required in these quarterly payroll reports and how to prepare them.

What Information is Required?

The information required in a quarterly payroll report varies by state but generally includes:

data on employee wages earned each quarter
employer contributions made during the same period
taxes withheld from employee paychecks

The report will also include detailed records of each employee’s gross wages (wages earned before any deductions) and net wages (wages after deductions have been taken out).

Additionally, employers should provide information on all employees, including their name, address, social security number, and job title/position held at the company or organization.

How to Prepare the Reports

Incline Business Essentials outsources payroll to a specialized payroll provider like Gusto or Quickbooks. These payroll providers ensure that the reports are remitted to the various jurisdictions in an accurate and timely fashion. Quarterly payroll reporting is included in the service we provide to ensure your company is compliant.

Filing quarterly payroll reports is an important part of running a successful business or organization. The process can be time-consuming, but we ensure this is handled on your behalf.

What is the Difference Between a CPA and a Bookkeeper?

May 18, 2023by Anna FaulkLeave a comment

Are you a small business owner, CEO or CFO trying to determine which financial professional you need for your organization? Both Certified Public Accountants (CPAs) and Bookkeepers are important roles in any finance department, but they have different responsibilities. Here’s what you need to know about the difference between CPAs and bookkeepers.

What Does a CPA Do?

A CPA is responsible for providing financial advice, managing taxes, and auditing financial records. They typically focus on long-term planning for businesses as well as individuals. CPAs also analyze complex financial data and create solutions that can help businesses reduce their taxes or increase profits. A CPA may also work with other professionals such as lawyers or consultants to provide the best advice possible.

What Does a Bookkeeper Do?

A bookkeeper is responsible for maintaining accurate financial records of a business’s daily transactions. Common tasks include tracking accounts receivable, accounts payable, payroll, budgeting, and invoicing. The goal of a bookkeeper is to ensure that all transactions are properly recorded so that accurate financial statements can be generated each month. While bookkeepers don’t usually provide long-term strategies or tax advice like CPAs do, they can assist with analyzing data and making sure everything is up-to-date and accurate. This helps the business make informed decisions by having reliable data on hand at all times.

It’s important to understand the differences between CPAs and bookkeepers when hiring for your organization’s finance team – both play an essential role in helping you reach your goals! While CPAs provide strategic guidance on long-term planning and reducing taxes, bookkeepers keep track of day-to-day operations by tracking expenses and generating accurate reports from this data. Together, both roles are critical components of running an effective finance department!