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Simply put, cash flow is a reflection of how money moves into and out of your business. For small businesses, in particular, cash flow is one of the most important components of their financial health and business owners often face challenges when managing it. Nevertheless, by taking the time to read about these three key cash flow formulas—free cash flow, cash flow from operations, and cash flow forecast—you’re on the right track to feeling more knowledgeable and confident a

The current ratio is one of the important indicators when it comes to determining a company’s solvency - the ability to pay its short-term obligation using its current assets. The accounting ratios reflect the overall financial health of a company. Here’s how it works and how you can calculate it. What is the current ratio? The current ratio (also known as the current asset ratio, the current liquidity ratio, or the working capital ratio) is a financial analysis tool used to

As a contractor, you are working on many projects, whether it is a small task or a big project, it requires months, years, or even decades to complete. Thus, meticulously tracking the cost of goods sold and keeping them separate from regular business expenses is key when it comes to measuring job profitability. What is the Cost of Goods Sold in Construction? Cost of Goods Sold (COGs) refers to the direct costs incurred in the production of any products and services by a compa

Construction is one of the hardest industries to manage cash flow in. For many projects, general contractors and subcontractors often face large up-front costs and frequent, long delays between expenses and payment. As a business owner, you may know that you aren’t getting paid in full until the work is completed and accepted. The construction retainage practice throws another wrinkle into the process. The retainage allows a project owner to hold off on paying the full price

When your company purchases goods on credit that need to be paid back in a short time, it is known as accounts payable. As a business owner, you have to pay a handful of bills each month, and thus accounts payable become an evil. It’s a source of money going out - instead of coming in, so it’s unpleasant to think about it. In this article, we’ll take you through everything about accounts payable to provide better insight into what they are, how they affect your business, and

If you’re running a construction company, regardless of whether it is a general contractor subcontractor or something in between, you must win and complete jobs effectively. To achieve those goals, you need a job costing system to accurately bid and estimate projects. Proper job costing has tremendous effects on your business’s better profitability, project estimating, management decisions, and timely financial reporting. What Is Job Costing? Job costing is an accounting meth

Small business owners said that bookkeeping was their least favorite task. However, most small business owners understand how important it is for their business -- It helps them manage finances, capture expenses/loss, track profitability, monitor cash flow, assess solvency, and a few benefits different. The problem is that your employees may view accounting as just another task. For them, the numbers might seem arbitrary. Salespeople only care about sales. The technical depar