Posts Tagged ‘cash flow’

It’s OK To ‘Think Small’

Friday, November 20th, 2015

Revenue Growth Isn’t Always The Solution

Revenue Growth - Ohio CPA Firm

Your revenue is like the water level. When it’s high, it hides a lot; but when it’s low, problems begin to reveal themselves. Unfortunately, some business owners believe that the best way to fix their business is by adding revenue. What they don’t realize is that this tactic is simply masking the real problem.

Have you ever been white water rafting? When the water is high, you glide effortlessly through the river, expertly navigating the bends and slicing through the current – it’s exhilarating. Flash forward a few months later, after the water level has dropped, and it’s a completely different story. Where it was once smooth sailing, you are now confronted with a scattering of rocks, boulders, logs and branches. Your ability to progress through the course takes a hit.

Your revenue is like the water level in this example. When it’s high, it hides a lot; but when it’s low, problems begin to reveal themselves. Unfortunately, some business owners believe that the best way to fix their business is by adding revenue. What they don’t realize is that this tactic is simply masking the real problem.

Sometimes, More Is Less

If you want your business to be healthier, you can’t rely on revenue growth to solve your problems. In fact, you may find greater success if you start thinking small.

Businesses that are healthy tend to be able to generate healthy cash flow. This means that you need to pay attention to more than just your ability to generate revenue. For example, you could find great success if you were to tighten up your billing strategy. Oftentimes, business owners will only focus on their monthly revenue and forget to consider how long it actually takes for the money to roll in. Even though your company’s revenue looks great for the month of July, it could be September (or later) before you actually get paid. In the meantime, you are stuck playing the waiting game.

Instead of looking for more customers to cover the difference, start thinking small. Get rid of the extra baggage that’s holding you down. Revenue doesn’t mean a whole lot unless you have the cash to back it up. To that point, it may be time to stop doing business with clients who aren’t prompt when it’s time to pay their bills on time. Instead, be more selective when choosing who you will do business with.

What’s Holding You Back?

It can be a lot of work to identify what’s holding you back and sometimes you need to look at your business from a different perspective, some business owners find great success simply asking for help from an outsider. There is no one-size-fits all solution. The best way to take control of your business is to work with a trusted advisor.

A great place to start is by listening to our podcast, Unsuitable on Rea RadioEpisode 10: The Revenue Sin covers business health and what you can do to strengthen your cash flow. When you are done, click here for additional resources.

Do you have a business question you need help solving? Send it to and let us know what issues are challenging your business. We could feature your question on an upcoming episode of Unsuitable or in a blog post.

By Brad Martyn, Founder & CEO, FocusCFO

Looking for more ways to improve your business? Check out these articles:

Not All Growth Is Good Growth

5 Reasons Why Managing A Solid Cash Flow Is Just Good Business Sense

Drive Internal Cash Flow And Improve Profitability

Share Button

Why would I want to listen to a podcast from an accounting firm?

Wednesday, October 7th, 2015
Unsuitable Podcast - Ohio CPA Firm

Mark Van Benschoten (left) talks with Doug Feller, a principal and financial advisor with Investment Partners, talks about wealth enhancement and investment tactics for an upcoming episode of Unsuitable on Rea Radio, a new financial and business advisory podcast from Rea & Associates. Click here to learn more about Unsuitable on Rea Radio.

I know what you’re thinking – listening to a podcast from an accounting firm is probably about as entertaining and insightful as watching paint dry. But Unsuitable on Rea Radio isn’t your typical accounting podcast, and here’s why.

Real, Simple Solutions

Who doesn’t like a good story? What about one that leaves you with greater insight into the financial wellness of your own company? And if you had a better idea of how other successful entrepreneurs manage their wealth, wouldn’t you try to follow their lead?

The professionals at Rea have seen a lot over the last several decades and they are willing to open the curtain just enough to provide you with the information to forge your own success. And on Unsuitable, they do just that.

An Effective Kick In The Pants

Unsuitable offers a little something for everybody and I am confident that this is a show that will not only help provide you with more clarity, but will motivate you to take the next step as a professional and as a business leader.

Look at what has already been discussed in the first four episodes:

And this is just the beginning. Look for episodes highlighting investment strategies, Affordable Care Act compliance and retirement preparedness – just to name a few.

Accountants Like To Laugh Too

This may come as a surprise to many since those in the accounting profession tend to be thought of as dry, stuffy, number-crunching fanatics, but that’s just not true – well, most of the time. The Rea team consists of some pretty humorous, outgoing folks and I think that the diverse sense of humor of our team shines through. Mark Van Benschoten, the host of the show, helps a lot, of course. He does an excellent job addressing each guest and makes them feel comfortable … then the show gets really good.

Just The Right Length

Our firm has 11 offices throughout Ohio, which means I do a lot of driving. When I’m on the road I like to listen to podcasts – and there are a lot of them out there! What I really like about Unsuitable, is that it’s long enough to be really informative and wraps up nicely before it reaches the point where I am wishing it would end. In fact, when it does end I find myself wanting to start the next one. Mark and his guests get right to the point of the show, provide examples and offer hard-hitting advice in a concise, enjoyable format – all while having a great time and avoiding stuffy accounting jargon.

Go to now and start listening or subscribe to Unsuitable on Rea Radio on iTunes or SoundCloud. I also want to encourage you to use #ReaRadio to join the conversation on Twitter and Facebook.

By Lee Beall, CPA (Dublin office)

Click here and start listening to Unsuitable on Rea Radio now!


Share Button

5 Financial Secrets Of Successful Business Owners

Tuesday, September 29th, 2015
Financial Secrets Of Successful Business Owners - Rea & Associates - Ohio CPA Firm

After following through with a 13-week cash flow for almost a year, you will have better insight into how to spend your profits to help your business generate additional cash and sales. Visit to learn more and listen to Rea’s podcast — Unsuitable on Rea Radio.

Many business owners find difficulty coming to terms with their financial obligations. They will dedicate long hours combing through their company’s expenses, invoices and payroll to arrive at an annual budget, only to let the report sit until it’s time to repeat the exercise again a year later. A 13-week rolling cash flow helps take the stress off business owners when it comes time to make important strategic decisions throughout the year. But in order to get your company back on the right track, you must be ready to change the way you look at your company’s finances. These five financial secrets of successful business owners will get you on the right track.

Listen To Unsuitable On Rea Radio – Why $1 Million Doesn’t Matter

1)     Know how much cash you have on hand.

We’re talking about tangible cash here; and to know how much you actually have on hand you will have to look beyond the ending balance on your business’s bank statement while not letting yourself get caught up in a sea of technical information, graphs and presentations. The three most important questions you should be asking every week are:

  • How much money do we have in the bank?
  • What is our accounts receivable balance?
  • Who do we owe and how much we owe them?

The other information and reports are still important, they just aren’t as critical when you have to make big decisions without a lot of time to ponder your company’s short- and long-term financial state.

2)     Understand your billing practices.

To get an accurate picture of your company’s cash flow, you will need to take a closer look at your current billing practices to find out if you are getting your bills out on a timely basis. Don’t be tempted to gloss over this step. It may surprise you to learn that a lot of decision-makers and business owners think they are on top of their billing activity, only to learn that they’re not. A 13-week cash flow budget will expose this weakness and will get you back on track.

3)     Delegate ownership of your cash flow. 

We are all busy and it’s easy to be enthusiastic about implementing a 13-week cash flow strategy — in theory. But when it’s time to actually put your strategy into action it’s easy to blame “lack of time” for why you put it off. The good news is that you can delegate the work to someone who has the time. You really can’t afford to ignore your cash flow. When you understand where your money is coming in from and where it’s going, you will begin to see positive results.

4)     Review your cash flow projection often.

While it’s great to write out an annual budget or a three-year-projection, most owners will push the document to the side … where it will begin to gather dust. Then, when the day comes when you need to know the financial state of your company for decision-making purposes, you are left with inaccurate, outdated information. When this happens, your effectiveness and accuracy as a leader is challenged. It doesn’t have to be though. When you review your cash flow regularly, you arm yourself with the tools need to make financially strategic decisions. For example, after following through with a 13-week cash flow for nearly a year, you will gain greater insight into how to spend your business profits to help generate the additional cash and sales needed to facilitate sustained growth.

5)     Put your accrual basis profit in its place.

While you may still need to have an accrual statement or generally accepted accounting principle statement to appease regulatory agencies, you would do well to remember that when it comes to the lifeblood of your business, cash flow is king. In all likelihood, businesses of all sizes should consider keeping two sets of records — an accrual and a cash basis statement — to maintain your company’s compliance among all stakeholders.

You can’t spend accrual basis profit. You can, however, spend cash basis profit. Which is why, at the end of the day, you’ll find that your banker, your lender, your shareholders, etc. … will take more interest in your cash flow strategy and your cash flow budget than your other reports.

Want to learn more? Click here to listen to Unsuitable on Rea Radio and find out “Why $1 Million Doesn’t Matter.”

By Dave Cain, CPA (Dublin office)

Visit for more episodes of Unsuitable on Rea Radio or click here to subscribe to the podcast on iTunes or click here to listen to the show on SoundCloud.

Share Button

Don’t Shy Away From Business Debt

Friday, May 22nd, 2015
Leverage Your Debt - Leverage Your Cash Flow - Ohio CPA Firm

Traditionally, companies with strong, positive cash flows are those with proper pricing models in place, a healthy labor force, controlled spending and active collections. When it’s time to grow, they are ready to make a move.

You know the satisfaction you feel when all of your debts have been settled and any extra cash flowing into your bank account is purely disposable income. Neither do I. But, contrary to popular belief, if you are a business owner, carrying a little extra debt could be a good thing – and here’s why …

Read: How Can My Statement of Cash Flows Transform My Business?

One of the most important jobs a business owner has is to prepare, monitor and analyze their company’s cash flow. As the single most important tool you have in your business’s arsenal, your company’s cash flow (business income minus its cash payments) provides you with an accurate way to measure its overall financial wellness.

Do You Know What You Need To Grow?

One of the most powerful ways to measure how well your company is doing is to monitor its projected/forecasted cash flow while analyzing the business’s past financial information.

  • Your company’s projected/forecasted cash flow should provide you an educated prediction of your future cash income and expenses. You can use this information to develop the initiatives needed to ensure the long-term growth and sustainability of your business.
  • When you monitor your company’s past cash flow you will tap into the data needed to zero in on the business’s strengths and weaknesses – effectively shining a light on processes, products, services and strategies that are hindering your company’s growth. Then you can act quickly to build upon the objectives that work and eliminate those that hinder ongoing success.

Traditionally, companies with strong, positive cash flows are those with proper pricing models in place, a healthy labor force, controlled spending and active collections. (Notice that I didn’t say that these companies were debt free!)

Leverage Cash Flow, Leverage Your Debt

The word “debt” has a bad reputation. Yes, for many reasons living your life and managing your business “debt free” can be a great thing. But, especially in business, working exclusively for the purpose of eliminating all debt can actually hinder you from experiencing healthy, sustainable growth. For example, in the quest to settle your company’s debts, you may be left with an anemic savings account and little-to-no cash to jump on opportunities that arise and could potentially propel your company to new heights. As a savvy business owner, you should always anticipate changes that could positively and negatively impact your business. The key is to leverage your company’s cash flow. Here are two ways you can get started.

  1. Take advantage of financing opportunities with favorable interest rates.  

Oftentimes, especially if you have taken the time to develop a strong relationship with a local financial institution, you can secure financing at a very low interest rate. This will allow you to take the cash that was not used to finance your project and reinvest it in the market, which can provide you with a better return. For example, in the current market, if you are able to finance new equipment for your company with an interest rate of 4 percent, you are free to invest your own cash in the market, which could yield a return rate greater than the interest charges you owe to the bank per your financing agreement.

  1. Utilize a line of credit

One of the best ways to invest in your business is to make sure you have the cash on hand that will allow you to take advantage of unforeseen opportunities. It’s hard to predict when a strategic partnership or change in the marketplace can open up a door that had previously remained shut. But when it does, an open line of credit makes seizing the opportunity possible while ensuring that your business’s current operations remain unaffected.

If you practice strategic control over your business, make sure you are giving your cash flow the same attention. To properly leverage your company’s debt you must constantly monitor your cash flow to ensure that these strategies make sense for you. Email Rea & Associates to learn more about leveraging your cash flow and whether it is the best move for your company.

By Dustin Raber, CPA (Millersburg office)


Related Articles:

Cash Flow Is King: Where Do You Need To Focus?

Should You Maximize Cash Flow Or Minimize Income Taxes?

How Do You Increase Cash Flow?

Share Button

Is A Sale-Leaseback Transaction Right For Your Business?

Tuesday, March 3rd, 2015
Sales-Leaseback Transaction

Is it a better business strategy to enter into a sale-leaseback transaction on your current office building or other business property? Make sure you know the pros and cons before making any decisions – Rea & Associates – Ohio CPA Firm

Are you looking for a plan to increase your business’s cash flow? If you own business property, you may be able to benefit by entering into a sale-leaseback transaction. But while there several great benefits to this type of agreement, there are also some significant drawbacks. So, before you draw up the paperwork, schedule a time to meet with your financial advisor to find out if the benefit outweighs the risk.

Advantages Of A Sale-Leaseback Transaction

A sale-leaseback transaction occurs when you, the real estate owner and occupier, sell your property to a third party on the condition that they agree to lease the property to you. Entering into this type of arrangement has several benefits, including increasing your business’ cash flow while freeing your business up to allocate the capital to other areas of your business. Additional benefits include:

  • As the seller and eventual lessor, you essentially maintain control of the property, which prevents operational disruptions from occurring.
  • Assuming the current property is financed with debt, this long-term debt can be eliminated from the balance sheet under certain lease arrangements.
  • From a tax perspective, you gain an additional annual “write-off” for the portion of rent related to the land (as land is not depreciated).

Drawbacks Of A Sale-Leaseback Transaction

Perhaps the most significant disadvantage of entering into this type of agreement is that you stand to lose the flexibility that comes with owning the property outright since these transactions usually are for longer terms than a typical property lease (15 or more years). The typical sale-leaseback transaction takes the form of a “triple net lease,” which usually states that you, as the tenant, will be responsible for the net real estate taxes, net building insurance and net common area maintenance. Other disadvantages include:

  • The loss of the real estate’s appreciation value over the course of a lengthy lease term.
  • Significant income tax impact that comes in to play when a property’s sale price significantly exceeds the property’s “book value.” This typically occurs when you are selling a property that has been owned for a long period of time prior to the sale.
  • A decrease in your Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) as your depreciation expense on the property is replaced by the rent expense.

The financial benefits of sale-leasebacks must be balanced with your unique strategic and operating considerations. A financial advisor and business consultant can help identify whether this option is right for you and your business. Email Rea & Associates to learn more about sale-leaseback transactions and other strategic business decisions. By Ben Antonelli, CPA (Dublin office)  

Related Articles

‘Ghost Assets’ Haunting Your Business? How Can A Small Business Owner Keep More Money In Their Pocket? How Will A Tax Credits and Incentives Plan Benefit Your Business?

Share Button

Is Your Cash Flow Ready For Spring?

Tuesday, February 17th, 2015
cash flow - Rea & Associates - Ohio CPA Firm

Cash flow is arguably more important to your company’s success than your bottom line because it takes your past, present and future projections into consideration to arrive at a comprehensive analysis of your financial wellness.

Spring is the season of renewal. It’s the time of year when we emerge from our dens to enjoy warmer weather, the melting of snow and an abundance of greenery as nature appears to come alive. Spring is also an opportune time in the business world. And before we lose ourselves in the hustle and bustle of increased production and revamped initiatives, take this time to review and solidify your company’s cash flow projection.

Managing your cash flow now will help minimize mistakes later – when business and economic trends become more favorable. Still not convinced? Here are five more reasons to consider maintaining your company’s cash flow projection.

5 Reasons Why Managing A Solid Cash Flow Is Just Good Business Sense

  1. A cash flow projection will provide you with the information you need to make better, more lucrative decisions. For example, if you had insight into which of your company’s non-core assets are viable would you make changes to support future growth or would you simply maintain the status quo? With a well-maintained cash flow projection at your fingertips you can make decisions that will help secure a more lucrative future for your company.
  2. If you’re looking for a way to hold you and your team accountable for the company’s success and failures, look no further than your cash flow model. This tool can help you fine-tune your management strategy, which can help you and your team achieve better quality standards, increased production, enhanced efficiency and an improved reaction time.
  3. Your cash flow strategies can empower your team to take further ownership of their work and pride in the company. When they have a chance to see that their actions influence how well the business does as a whole they will be more likely to seek out opportunities for improvement.
  4. When you have a cash flow projection then you have the tool needed to develop timely and attainable goals. When you have a better idea as to how much money is going out and coming in (and why), you and your management team can put plans in place to better manage the company’s cash flow in a more favorable way.
  5. Are you managing cash that you acquired from an external source? Will you manage acquired cash in the future? Stakeholders love cash flow projections because they provide them with the information they need to monitor their investment. Oftentimes banks require you to provide quarterly financial information to prove that you’re complying with the terms of the loan package.

Cash flow is arguably more important to your company’s success than your bottom line because it takes your past, present and future projections into consideration to arrive at a compressive analysis of your financial wellness. Email Rea & Associates to learn more about the importance of cash flow projections and how you can use yours as a valuable management tool.

By Dave Cain, CPA (Dublin office)


Related Articles:

How Can My Statement Of Cash Flows Transform My Business?

Cash Flow Is King: Where Do You Need To Focus?

QuickBook Tips For Managing Cash Flow

Share Button

How Can My Statement of Cash Flows Transform My Business?

Friday, February 28th, 2014

Do you realize that your business’s financial statements are a valuable management tool for decision making? You may be thinking, “Well, I just get them done because the bank needs them for my loan file,” or, “I think I have a copy in a drawer somewhere.” But if you take the time to understand your financial statements, you’ll be surprised to find that they can give you information on the condition of your company and allow you to make better business decisions.  (more…)

Share Button

How Can Contractors Ensure They Have Sufficient Cash Flow?

Monday, October 28th, 2013
As a construction contractor, income taxes are probably the furthest thing from your mind. And you’re probably not too excited about writing big checks to the respective taxing authorities. (more…)
Share Button

Cash Flow is King: Where Do You Need to Focus?

Thursday, May 9th, 2013

Do you know the current balance of your business checking account? If you don’t, keep reading. Cash flow is the key to business survival. A healthy business generates money for the operations of the business.  (more…)

Share Button

Do You Have Any QuickBooks Tips for Managing Cash Flow?

Wednesday, December 26th, 2012

Cash flow management is a struggle for many small businesses.  Unlike revenue, cash flow isn’t easy to quantify or pin down.  It’s up and down and moves around.  But, most small businesses that fail do so because of a lack of cash flow… not revenue or profits. (more…)

Share Button