Arkansas HVACR NewsMagazine November 2019

Business

Identify those areas that need attention and those that we need to replicate.

majority of your payables in the first three columns. Keep lines of communication open with your suppliers to reduce strain on the relationship with them if you are past due. The receivables report is a list of who owes you money. Just like the payables report, this is a snapshot in time and shows you who owes you what as of the date that you are running the report. This report should have the same columns as your payables report. You want to keep the vast majority of your receivables in the first two columns. It’s difficult to keep your payables in the first three columns if your customers aren’t paying you. The Hill and Valley account could also be called your Rainy-day fund. What are the chances you are going to have a slow month coming up? My guess is pretty good. How are you going to maintain cash flow when there is no money coming in? Be intentional about creating and funding a Hill and Valley account. Make a payment into this account each month. Treat it like another loan or your rent payment. Make it a part of your budget. Be quick to make the payment and be slow to pull monies out. Your Hill and Valley account should be large enough to cover a couple months of fixed operating Accounts Receivable’s Hill and Valley Account

Balance Sheet

The balance sheet is broken down into three sections – Your assets, your liabilities, and your equities. Customize this report in the same way did for the Profit and Loss. The balance sheet is a snapshot in time. By itself, it doesn’t give you a sense of a trend. You will need to compare it to other months to get this story. Ask yourself the tough questions. Has your debt started to climb over the last few months? Have you paid off debt and now have more equity in the company? Have you been pulling too much money out of the company for its overall financial health? If you are reviewing things monthly, you will start to see this story unfold and make changes in course throughout the year. The payables report is a list of who you owe money to. This is a snapshot in time. It shows you where you are at as of the date that you run the report. The balance sheet had a line item for total payables. This report is the detail that makes up that total. A well laid out payables report should have columns for balances that are current, 1-30 days past due, 31-60 days past due, 61- 90 days past due and over 91 days. You want to keep the vast Accounts Payables