Sullivan & Company - Certified Public Accountants 4709 Montgomery Lane #201 - Bethesda, MD, 20814 Phone: 301-657-8080



Paul Sullivan, CPA

Sullivan & Company


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August 2010 Articles

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Feature Articles

- Cash Flow - The Pulse of Your Business

- Planning Retirement Withdrawals

- Credit Reports: What You Should Know

- Paying Off Debt the Smart Way

- Homebuyer Credit Closing Deadline Extended

Tax Tips

- Tax Benefits for Job Seekers

- What to Do If You Haven't Filed Your 2009 Return

- Basic Hints to Help New Small Businesses

- Seven Tax Tips for Students with a Summer Job

QuickBooks Tips

- Banish Security Fears: Use QuickBooks's Protection Tools

Financial Planning Tips

- Prepare a Post-Mortem Letter

- Get Your Social Security Statement of Benefits

- Review Your Budget vs Actuals for July

- Estimate Your Tax Liability




CASH FLOW - The Pulse of Your Business


Unfortunately, many small business owners do not fully understand their cash flow statement. This is shocking, given that all businesses essentially run on cash, and cash flow is the lifeblood of your business.


Some business experts even say that a healthy cash flow is more important than your business's ability to deliver its goods and services!


That's hard to swallow, but consider this: if you fail to satisfy a customer and lose that customer's business, you can always work harder to please the next customer.


But if you fail to have enough cash to pay your suppliers, creditors, or employees, you're out of business!


Cash Flow Example: If your retail business bought a $1,000 item and turned around to sell it for $2,000, then you have made a $1,000 profit. But what if the buyer of the item is slow to pay his or her bill, and six months pass before you collect on the account?


Your retail business may still show a profit, but what about the bills it has to pay during that six-month period? You may not have the cash to pay the bills despite the profits you earned on the sale.


Furthermore, this cash flow gap may cause you to miss other profit opportunities, damage your credit rating, and force you to take out loans and create debt. If this mistake is repeated enough times, you may go bankrupt.


The rest of the article talks about What is Cash Flow, Cash Flow vs Profit (see above box) and 5 Areas to Analyze Your Cash Flow.


For more cash flow information click on the rest of the article.  Or if you want to talk or ask me questions, call me, Paul Sullivan, at 240-316-3531.



As always you can call our offices if you have any questions about these or any other accounting related issues, at 301-657-8080. 


Regards, Paul Sullivan, CPA