Today's Technology for Tomorrow's Firm.
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BUSINESS IN PRACTICE I Rule #1: Cash is King I fi rst heard this phrase growing up around a couple of entrepreneurs/accountants — my parents and grandparents. My grandparents always had their own company. Granddad was the salesmen and grandma was the accountant. My parents were the same except Dad was more product visionary than sales and mom was the back offi ce, including accounting. T ey all understood how to manage cash. In fact, you don’t start multiple businesses during your life unless you understand how to manage cash. T is was the root of success for both my grandparents and parents. Stretching out payables and pulling in receivables is not something they were taught. It was something they experienced. I think this is true for everyone. T ink about it: How well did you under- stand managing cash before you needed to worry about making payments next week? What about your clients? And they probably don’t even have an accounting degree or any training in accounting. Even though I heard this adage over and over as a kid, and received a quantitative economics degree and worked for PriceWaterhouse as an accountant, I didn’t understand how to do this well until I experienced it fi rsthand, when I started PayCycle. T at’s when the conversations from the dinner table came to be front of mind. Reviewing the weekly check run always involved more complexity than I imag- ined. Questions such as whom do I pay this week? Who got paid recently? What does the contract say? Does my team want me to pay this vendor? What money is coming in next week? Why hasn’t that customer paid me? How confi dent am I that the money will come in? I could go on and on, but you get the driſt . I had to experience it to understand all the idiosyncrasies. So as you think about budgeting and forecasting, I would encourage you to think more about the tools you use to manage cash. When I talk with accoun- tants, I often hear about the piecing together of multiple systems — using spreadsheets, online banking, accounting soſt ware and sticky notes, to name a few. And yet, if the most important thing is cash, shouldn’t the business use a sophisticated approach to managing it? dinner table, managing cash was a team eff ort. It included my parents and grandparents, staff in the offi ce, remote accountants, vendors, and customers. It was something that was done on Saturdays or aſt er hours. Interestingly enough, I have noticed that most of the email invoices we receive are coming in aſt er hours or on the weekend. Some things don’t change. Small business owners are busy building their business during the work day/week, but they are busy managing their business at night and on week- ends. As their accountant, anything you can do to help them be more effi cient will improve their results, let alone their loyalty to you. As I said, I believe managing cash is a team effort, and you the I BELIEVE MANAGING CASH IS A TEAM EFFORT, AND YOU THE ACCOUNTANT ARE AN INTEGRAL PART OF THE TEAM. T is may sound sacrilegious, but I never log in to Rene Lacerte Mr. Lacerte is CEO and Founder of Bill.com and the former CEO and co-founder of PayCycle. As a third-generation entrepreneur building solutions for accountants, he is uniquely qualifi ed to bring insights from an entrepreneur’s and accountant’s perspective. He can be contacted at rene. lacerte@CPAPracticeAdvisor.com. our accounting soſt ware. T at’s the job of my con- troller. Granted, our business is a bit more compli- cated than most and warrants a full-time controller, but when I talked to my dad about running his business it was the same. As I talk to more and more small businesses, it’s clear that business owners look at the P&L; and balance sheet infrequently. But we look at cash daily. What tools are you giving them to help them manage cash? When I think back to the conversations at the accountant are an integral part of the team. So think about the tools you are using to manage your cash. Would these same tools help your cus- tomers bet er manage their cash? Are you satisfi ed with the tools you use? If not, take a look on the Internet and see what tools are available. Check out your bank, and look at the app store for your accounting application. T ese tools exist. Good luck building your own kingdom, where you can be crowned as the King/Queen of Cash! August 2011 • www.CPAPracticeAdvisor.com 17