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Part Two – Understanding cash flow and reporting
Series: Tax Essentials for Tradies and Contractors
Guest: Tab Burkhalter from The Numbers House
Accounting is one of those topics that is hard to make sexy, but when you learn new tricks, it can make an incredible difference to both your business and your personal life.
When I started my business journey, I never had any advice or counsel from anyone that had a clue about numbers. I had no one in my corner. There were no podcasts, no amazing facebook communities. Even my accountant at the time was an absolute punish to get information out of.
In this series, Tab dives into three essential areas that tradies and contractors need to focus on. Three areas that I wish I had better understood when I started out. Three areas that we could probably all improve on.
My advice to everyone, especially those starting out in business, is to learn numbers and understand your finance. You don’t need to be an accountant to keep yourself on track and out of danger.
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About this podcast, ‘Understanding cash flow and reporting‘
Podcast Highlights:
- 02:34 – The accrual method of accounting
- 05:41 – Cashflow supporting expenditure
- 07:03 – Budgeting
- 10:38 – Managing tax and overheads
- 13:34 – The danger of pricing jobs at cost & hoping on variations
- 19:36 – Charging $250 will barely break even
- 22:54 – Financing shortfalls on credit cards
- 26:21 – Reconciliation frequency and habits
- 30:51 – Banks making money off poor cashflow management
- 33:53 – The owners’ draw
Stemming on from part one of the ‘Tax Essentials For Tradies & Contractors’ series, titled, ‘Why you need two sets of books’, this episode dived deeper into the importance of understanding how to manage cash flow and how to report on our numbers.
I know over the last 12 months, I’ve implemented a weekly reporting schedule into my business and we’ve had the best year yet. Is that the only reason? Likely not. However, it’s certainly made it easy for me to see potential problems arise in the early stages.
The two things that were the turning point for my businesses, would certainly be understanding cash flow and regular reporting. I just used to bury my head in the sand and not want to confront reality. Since I changed that, my business has progressively got better and better.
In this podcast, Tab runs through his methods of managing cash flow and accurate effective reporting. Enjoy.
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