The Challenge
Net income, often, but not always, tracks closely with net income. Does your company consistently generate reports showing your cash flow vs. net income discrepancies?
The Solution
Ideally, business owners shouldn’t stay immersed in month-to-month cash flow analysis. With the right systems and procedures in place, your accounting software should automatically generate timely reports that show the discrepancies between cash flow and net income.
- > Systems: business owners need to utilize accounting software that readily generates P&L Statements for both the cash basis of accounting as well as the accrual basis of accounting.
- > Procedures: bookkeepers need to be trained and supervised on how to properly record:
- Invoicing,
- revenue collections,
- recording and paying bills,
- recording short-term and long-term liabilities,
- and other nuisances.
With the right accounting software and correct accounting procedures, business owners will be able to simultaneously track both cash flow and earnings.