For Business accounting concepts. Small money should go in and big money should go out. With this, you are now ready for the process.
Once money goes into the business, you can see that it will begin to transform from Small Money into Big Money.
Money goes through the business process and eventually ends up becoming a product.
The product is handed to the customer who in return takes the product (small money) and changes it into big money if he is glad and satisfied with the product given or the service rendered.
Once you cannot get a customer, the product will be stored away and will be called stock. We name stock an Asset.
If you find a customer who does not pay now and will just pay afterwards, we call this customer a debtor.
Cash is blood and this must flow. A blood that doesn’t flow is called… A Blood Clot.
When you have a blood clot (A Debtor) what has happened? Is this money moving? Defintitely not.
What is this? What do you do if there is a blood clot? Get W.A.C.C. (Weighted Average Cost of Capital) the cash not moving has a cost to you. The longer it stays the more it costs you.
Financial Literacy.
“”Go Beyond the Numbers”" this will give you some knowledge and skills and with that knowledge, you will be able to implement it in your company. That is the goal of this finance courses.
It is essential that you discover and learn how everything that you do ends up in Profit Loss Account, Balance Sheet, Cash Flow. If you know how to read these statement, you would recognise who is doing what in your business or company.
Look at every report. Have a look at your debtors report. This is the appropriate way in reducing your blood clot. Learn to “”Go Beyond the Numbers”" Know where they came from-Who created them and Why… then take the right action to enhance or correct this action.
Once you understand the basics of learning accounting fast, you will have authority over your business. Unaware of what you are doing can be fatal.
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Filed under Accounting, Bookkeeping by on May 1st, 2011. Comment.
Since telecommunication is rapidly expanding, people are opting to invest in alternative ways of communication. VoIP billing software has better voice quality compared to standard telephone lines. Since the internet has become a global tool, it has increased the awareness associated with the service.
It is important for the user to consider the rate they are being charged for the service. If a business experiences an increase in the number of people they serve, they will need a system that allows them to provide quality service to each one of them. Attempts to accomplish such a feat without the help of experts will end up in the consumption of too many resources on the part of the business. This is why VoIP billing is essential for all companies.
Choose a system that has the capacity to offer other services apart from accounting. It should provide the owners with a chance to monitor how their customers are utilizing their services. When purchasing the application, inquire about what other features are in the package.
If the business operates on a wholesale level, they need a structure that handles every charging system. All the business measurements should be handled in the appropriate way. It should display characters such as accessibility, security, scalability, and reliability when being used. The accountability can only be achieved if the business has the resources needed to track the customer’s calls.
Go for the system that has the capacity to handle building problems. This feature is needed in order to trace the calling rates and how the payments are made. It is the ideal choice for the service providers who are yet to find a time efficient way of doing it.
Once a business finds the ideal application to use, they experience an increase in their efficiency and accuracy. Organizations are driven by their own requirements. They are therefore able to request their service provider to design an application that works for them. This is the only way of ensuring that the system is reliable and secure as the business provides its services to its clients.
Make sure that the accounting applications have the ability to handle all your accounting needs. The system is expected to cut down on the time spent in accounting. There are systems that can handle the accounts in twenty percent of the time that a human being uses. The ways in which the service can be utilized are expansive. Customer satisfaction increases since inaccuracy is not a common occurrence for the business.
During the decision making process, there are a number of things that need to be taken into account. It is possible to set the VoIP billing system to monitor the purchase of calling time. At the same time, it can account for how the calling time was spent and even account for each detail. If the customer needs to look at their monthly updates, the application avails the information to them. They can even access online statement as a result of the services of the application. Satisfactory results are dependent on how compatible the system is to the organization’s needs. The appropriate system will deliver accuracy which can be translated into customer satisfaction thanks to VoIP billing system.
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Filed under Accounting, Bookkeeping by on May 3rd, 2011. Comment.
Learn how to manage cash flow…
This is very important,
Small money you put into a business you must get Big money out
Knowing this principle, you will get high sales and the customer is happy to pay. The key is he is happy.
You add value, the customer can see the value, is pleased and willing to pay.
The Owner. This is where small money comes from.
What does accountant call this money that the owner brings in? It is called CAPITAL.
Now, who else can take money into the business?
Bank? Who else? Financial companies? These group of people are called what? One word they are called the LENDER.
Therefore, the money that goes into the business, either comes from
1. The OWNER
2. Other people – the Lender
What do you call, when the lender puts in money to the business? Loan.
Every money has a price.
There is a cost even for the owner. That cost is called what? You have to pay the owner, a DIVIDEND.
DIVIDEND is the cost of using the OWNER’S money.
And for the cost of using other people’s money, it is called the INTEREST.
Let’s place in some numbers, let’s say if you put in $200,000 and your dividend is 15%.
SO now, how much does it cost you in one year, to use the owners $200,000?
What is the cost of capital? $30,000.
So, that is the cost of CAPITAL, and the cost of
using the owner’s money.
Let us say you have a loan of $100,000 and the interest is 10%.
Hence, the cost of using the lenders money or LOAN is $10,0000.
Now, I would like to introduce some accounting terms… this is what accountants tell.
CAPITAL is $200,000
The Loan is how much? $100,000.
Now, when the accountant says TOTAL CAPITAL EMPLOYED, how much would that be?
When Accountants say total capital employed, they regard LOAN CAPITAL and OWNERS CAPITAL (Equity Capital).
When an accountant say Capital, Which means that
EQUITY CAPITAL (Owners capital) $200,000
plus
LOAN CAPITAL (Lenders Capital) $100,000.
So how much would that be? $300,000.
So in accounting terms,TOTAL CAPITAL EMPLOYED means the total money that has been used to create a company.
Now you have another thing called the TOTAL COST OF CAPITAL.
How much would this be? $40,000
Why? (Owners Dividend) $30,000 plus (Lenders Interest) $10,000 equals $40,000.
Here is another word which you probably use a lot.
Weighted Average Cost of Capital. W.A.C.C.
If the costs of Divendend is 15% and Interest is 10%.
What is the weighted average cost?
So, how do we compute weighted average cost of capital?
We take…
$40,000 (Total cost of capital)
Divided by
$300,000 (Total Capital Employed)
equal to 13.3% (W.A.C.C)
So, what does that imply in cash management?
Which means that for small money to go in, big money must come out.
13.3% should be the minimum return capital.
So for every investment project you must gain a minimum return of 13.3%, meaning, the profit divided by the investment should be a minimum of 13.3%.
That is small money going in…. big money coming out. This is the cash flow game.
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Filed under Accounting, Bookkeeping by on May 4th, 2011. Comment.

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