Author Archives: Karl

Decision to start selling on credit – what to watch out for

A client using credit cards or loans means that you still get your money and this “loan” or “credit risk” is someone else’s problem. Selling directly on credit means that you’re this “someone” whose risk it is. Deciding to give your client credit means that you get more business, you make more sales, but it also means you need think of various extra bits you normally wouldn’t.

First thing first, you need to establish your own credit policy, conditions under which someone would get credit. Important bits need to be written down, agreed and signed by both parties. Conditions and standards regulate approval process, credit types, various charges applied etc.  Continue reading →

How do you treat Accounts Receivable?

Accounts receivable on your balance sheet are more or less your main asset. Well, obviously your cash and bank accounts are fairly close too, but as receivables are direct result from your sales revenue, they are to be treated with utmost accuracy and care – have the amounts correct, due dates monitored and clients kept happy and satisfied. It’s all what receivables are about.  Continue reading →

What are accounts receivable exactly?

A huge part of your business, I’d even say the main focus of your business, should be making sales happen. When it’s the sales you’re doing, you’re also as a result of it, encountering accounts receivable balances. Yes, if you’re selling and receiving money right away, you don’t have receivables, but matter of fact is that most of the businesses nowadays do have receivables on their balance sheet.

As I mentioned, if you’re selling on spot and receive money right away, you won’t have receivables. Why is that? It’s the nature of the receivable really and it’s already apparent from the name itself – receivable, i.e. something is to be received. This “something” is money that you’re about to receive at a determined date from your client, the party that got the goods or services the money is to be received for.  Continue reading →

Stock counts more often than just once a year

Owning inventory means that you need to count for it – both to ensure that it’s really there physically and also that what’s physically existing, is also accounted on the inventory ledger and hence also on the balance sheet. Whilst we’ve covered the general gist of stock counts, what we have not covered, are partial stock counts which happen more than just once a year.

A full stock count is something you normally do once a year. Given your business type and systems you may decide it’s best to do them more often, but as it is, it’s mostly done just once a year. However, there’s also an option to do just partial stock counts for specific areas, specific types of goods and so on. Either you do them on top of the full stock counts or you only do the partial ones, depends on the level of planning and detail you put into the partial stock counts. Continue reading →

Repetitive entries

In accounting some entries are repetitive – either by their nature, i.e. sales invoices coming in multiple times per day for an example, or by their function, i.e. prepaid expenses charged into expenses in their proper period on regular basis.

There’s nothing wrong with having repetitive entries, but as always there are a few things we’d like to point out which you should keep in mind when dealing with them. Generally speaking, when something is repetitive, it’s potentially attracting errors or an oversight in its essence.  Continue reading →

How is capital payments treated in general?

Every so often you may find yourself in a position where you need to make payments into your company’s equity. Those payments are called capital payments or capital investments. Situations which impose the need can be different – need for extra capitalization from outside parties, i.e. banks for approving new loans, periodic losses that decrease the equity to lower level than accepted by regulators, etc.  Continue reading →

Being accessible to people

In running your own business you must keep in mind a few things when it comes to communication. Being accessible to your personnel and / or clients is a tricky matter. On one hand you undoubtedly want your own time, time where nobody can reach or contact you with business matters, but on the other hand, it is your business.

In this sense, it being your own business, you cannot really take time off managing certain matters. Now unless you have a reliable person to delegate some things to, you need to ensure you can be contacted at time of need.  Continue reading →