ONE OF THE MOST MISLEADING BUSINESS PRACTICES IN EXISTENCE IS TO THINK THAT CASH EQUALS PROFITS!

Ever wonder why public companies are all required to report their financial results on an accrual basis? This is the true measurement of how your company is really progressing financially. Accrual accounting means that you account for a transaction when the substance of the transaction has been completed

You will never collect enough cash unless you bill enough in the first place!

in the United States the government allows you to file your personal tax returns on a cash basis and if you are running your brokerage as an unincorporated business, this means that you can report your company on cash. Do you think this is for your benefit or the governments? It just makes it easier for them to audit the books when all they have to review is the bank account. And your accountant's job is also easier if they don't have to worry about receivables and payables.

Your accountant needs numbers once a year to help you file your tax return with the government, who also just wants them once a year. You need #'s for your business every day. Don't be fooled by cash numbers that only show what has happened. An accrual set of books shows you what is going to happen! A simple change at year-end allows your accountant to change your accrual set of books to a cash basis and you can still file your income tax return.

Example:
If I charge enough fees to my agents, I know that I can make enough to pay my bills next month. Now your job becomes collecting the cash that you have billed. Making profits and collecting the cash are two different functions. Billing enough in the first place is Proactive, collecting the cash is Reactive.