I've been a CPA for nearly 20 years - serving private small business and real estate the entire time. I take the lessons learned in serving and now running a small business and share them here. For business owners, investors, and advisors looking to lower their cost of capital, subscribe for delivery straight to your inbox ๐ Also on YouTube at PlugAccountingandTax!
Good Accounting - a Small Business Luxury ๐
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In the world of small business and private real estate, accounting is a necessity ๐ค - but good accounting is a luxury. ๐ One of the differences in a seasoned business owner ๐ด and novice ๐ฉโ๐ผ is how seriously they take the need for smart people on the accounting team. Because accounting salaries are usually far less than the sales team is making, it's an opportunity for leverage ๐ช - and is much more than a "sunk cost" or "cost of doing business." Here are a few ways I've seen firsthand how finance and accounting professionals can impact the P&L: Cut Waste Quicker with Optimized Charts of AccountsA terrible chart of accounts gets bad 1 of 2 ways:
The truth - like most things in life - is somewhere in the middle. A good accounting team builds a chart of accounts that shows exactly where money flows from and to. โ๏ธ Instead of one general contractor line, you have labor, equipment, materials, and subcontractors broken out separately - spotting overruns faster. โ When equipment rental spikes 40% in month three, ๐ซจ you see it immediately. You can ask why and fix it while the problem is small instead of realizing in December you overspent the category by $200k. ๐ธ ๐บ ACCOUNTING FIRM UPDATE ๐บ Starting 2026, we will be offering Fractional CFO services to a select number of our clients. While most will engage in a monthly engagement, we will also offer one-off project based engagements for:
Our team leader comes with real world CFO experience in real estate and SMB - and is someone I've known and respected 10+ years. If you need help taking your accounting team to the next level, reply to this email. ๐ฉ Invoice Faster - Get Paid FasterGetting billing done on time and right is a massive unlock. ๐ต When working in industries like construction where you have a once-a-month shot at the draw request - time can absolutely kill your working capital ๐ชฆ and turn good projects to mediocre ones. Billing faster means a tight close process โฐ - getting all costs accounted for from shipping, delivery and time entry, and converting those costs to invoices. If a Controller doesn't know what's been shipped for 3-4 weeks, then they won't be able to invoice customers timely. ๐คทโโ๏ธ If they can't invoice customers timely, they are delayed on cash receipts to pay down debt driving up interest costs. If you operate on leverage, a good accounting team cuts borrowing costs often enough to pay for themselves. Better Forecasts - Better Credit TermsOnce you can close the books quickly and accurately, time to move to forecasts. ๐ญ This exercise relies on good books, but teams it with management's expectations and goals to predict capital needs and results. When done right, it changes leadership's focus from "fires du jour" to value creation. ๐ฎ And when you can show bankers and creditors a realistic picture of your balance sheet and cash flow for the last 2 years AND the next 12-24 months, everything changes. You now have leverage and a confidence to take your facility out for bid. ๐ฒ You may not be able to shake the personal guarantee yet, but getting the borrowing base up or terming out some variable debt can change the cash flow meaningfully. The TakeawayJust like in investing, Accounting and Finance departments compound their benefit. ๐ Closing books faster is done with better charts of accounts. Better charts of accounts comes from knowing what information drives the business forecast. And forecasting is a luxury to a business with late financials. Resources must be allocated to tighten up this process for business owners looking to take their finances to the next level. ๐ช So don't be afraid to splurge on good help. If this speaks to you - reach out for an introduction to our Fractional CFO and Client Accounting Service team. Business is hard enough, don't do it alone. ๐ซก ๐ฅ Hottest Finance Posts This Week ๐ฅ
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The Plug [Newsletter]
I've been a CPA for nearly 20 years - serving private small business and real estate the entire time. I take the lessons learned in serving and now running a small business and share them here. For business owners, investors, and advisors looking to lower their cost of capital, subscribe for delivery straight to your inbox ๐ Also on YouTube at PlugAccountingandTax!
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