The client runs a decent sized construction operation. Revenues in excess of a quarter million per year.
But he has no accounting system. He just takes his bank statements, receipts and chicken scratch notes to the tax man once a year to crank out a tax return.
No monthly bank account reconciliations.
No computerized records.
No accounting journals or ledger reports.
The entire system is basically a daily glance at the banking account balance and then just fly by the seat of his pants. It’s dancing on a hot plate.
Who needs paid this week? What blows up if I don’t pay it today? Do workers walk off the job? Do suppliers stop extending credit? Will the tax people start garnishments?
But the business is good, right? Money is rolling in. Big projects lined up. If we can just get this next job done then things will start to straighten out. Then we can hire the good accountant. That bookkeeper who cleans up the details. After all, accounting is just a detail. It’s an afterthought. It’s what you do when all the real work is done. Don’t worry honey, I’ll get to that later.
Yet, we never seem to turn that corner, do we? Things never quite get organized. And even though we know this is the wrong approach, we can’t ever stop the madness of flying blindfolded. Budgets. Planning. Profit and Loss analysis. Is the project actually making us money? Does it just leave us in more debt? Yes, bills need paid, but are we making progress or just working to pay overhead?
At what point do you stop the madness? When do we stop driving blindly on twisting roads at night?
Your shoebox system is not working. You have no system.
Just stop.
Image courtesy of Flickr and Don DeBold