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Difficulties of Cash Management for Wineries

Difficulties of Cash Management for Wineries

Small businesses often have cash management issues. In fact, over 60% of small business owners have cash flow problems from time to time. Over 40% of businesses have had cash problems so severe that they missed vendor payments, payroll, or leases. Controlling your cash flow is vital to the success of any business.

The wine making business, in particular, is a difficult one to manage cash flow for because of the nature of wineries. Here are some reasons wineries present a particular problem with regard to cash flow management, and here are some tips for keeping your wine producing in the cash-positive column.

Cash management is difficult for any business, but it is especially difficult for wineries because of the nature of the business. Here are some reasons why it is so difficult and also some tips for keeping your winery cash-positive.


Why Wineries Are A Special Challenge for Cash Management

Wineries are a special problem with regard to cash management for several reasons. First, wineries can be considered an agricultural crop if you have vineyards. Agricultural crops present a problem regarding cash flow because there are many costs that are difficult to predict. For example, you have a bumper crop of grapes growing this year. While you’re thrilled at the predicted crop yield, you realize you may need to hire more labor to get all of the grapes harvested. Contract labor is usually cash labor, which means your cash reserves are going to dip. Because wineries with vineyards are both an agricultural crop and a beverage, cash flow can be challenging.

Another reason cash management is a problem for wineries is because of the growing season. In general, from the time you begin with grapeseed until the time you harvest the grapes is approximately four years. Most agricultural crops begin and end within a calendar year. Because grapes for wine making have such a long growing season, unexpected expenses can crop up more than once. It can be difficult to control cash flow for wineries because there are both short-term (such as extra organic pest control) and long-term (such as an increase in barrel prices) costs.

Protea Financial Winery Cash Management

Why Is It So Hard to Manage Cash Flow in the Winery Business?

Wineries can find it hard to manage cash flow no matter how successful their wineries are. Here are some of the top reasons managing cash flow is more difficult at a winery than any other business.

First, wineries are both short-term and long-term businesses. In the short term, you have bottled wines for sale to customers. However, you also have wine aging in barrels and bottles that still count as inventory but are not for sale at the moment. The wine business isn’t like a convenience store, where the store owner buys products and then sells them to customers with a very quick turnaround time. Managing cash flow is difficult when you don’t have an end date in view.

Another reason wineries present a special problem regarding cash slow is a common one among all small business owners. Many small business owners, regardless of business type, don’t plan for emergencies. Even though cash management brings to mind stacks of cash in a safe, the term cash management refers to cash on hand, either in your business or in the bank. You will want to have an emergency fund at the bank for those business emergencies that always seem to happen at the least convenient time. For example, one of your employees accidentally drives a forklift over another employee’s foot. Do you have the money for a workmen’s compensation claim and the medical bills? It’s important to think ahead and plan a fund for life’s accidents.

When you own a small business such as a winery, you may have started with one employee at your backyard vineyard–yourself. Over time, however, your business has grown into a thriving enterprise with dozens of employees. You may still be thinking like a sole proprietor in terms of managing your accounts payable (expenses) and receivable (your income). If these aren’t regulated, it can lead to an overextension of your cash.

One of the largest reasons wineries have had difficulty with cash management is because of the stressors caused by the Covid-19 pandemic. The logistics for nearly all businesses have become difficult to predict. Delivery times for wine barrels, bottles and labels have been repeatedly pushed back. The cost of your raw materials themselves, such as cork, have increased as well due to higher transportation and delivery costs. Because wine production is such a specialized process, the number of vendors for corks and wine barrels are small, and the demands are sometimes large.


How to Manage Your Cash Flow Better

While it can be stressful to try and manage your cash flow for your winery, there are some steps you can take to improve your cash management.

First, it’s time to start making better budgets. If you are doing your own budget for your business, you need to begin to make expense categories for your winery. Although there are typical expense categories for businesses, you can make your own categories as well. You may want to have one column just for the costs of bottles and corks, for example.

Second, it’s time to watch your capital expenditures. Vineyards have a ton of capital expenditures at startup. You need equipment to farm grapes, and you may have purchased acreage for your grapevines. All of these capital expenditures come with financing, which means monthly payments. If you overspend on large capital expenditures, it may be difficult for you to manage your monthly cash flow.

You can also do weekly check-ins on your cash flow. Make a time each week to go over your books and look at your cash position. That way, if you have a massive increase or a massive decrease in your cash position, you can prepare for it, so there aren’t as many surprises.

Speaking of cash flow position, every small business needs an emergency fund. If you are nervous about keeping an emergency fund because you are on a tight budget, think about putting ½ % of your net profit toward an emergency fund. That way, no matter what emergencies come your way, you’ll be ready.

One of the best ways to manage your cash flow is to make sure you are collecting payments from customers in a timely manner. It can be particularly hard for wineries to apply revenue because they may sell wine by the bottle as well as the case. Usually, bottle sales are retail sales to individual customers, while case sales are to other businesses, such as restaurants and bars. In addition, you may sell barrels of wine to specific customers as well, so inventory management is just as important as cash flow management.

If you have an accounts receivable team, make sure they stay on top of incoming invoice payments. If you have been handling your receivables by yourself, it may be time to call in some help, even if you only pay them on a part-time or contract basis. By ensuring your receivables are coming in promptly, you will have incoming cash on a regular basis.

Protea Financial Cash Management for Wineries

Protea Financial Is Here to Make Cash Management Easier for Your Winery

There is an old saying about wine that states, “Beer is made by men, wine is made by God.” Any vineyard or winery owner would agree with that statement that it takes a special person to make wine. We would argue that it also takes a special person to handle all of the headaches that come with cultivating and producing wine.

As with many aspects of winemaking, nothing is ever simple or straightforward. However, if you remember these tips as a winemaker in the wine business, you’ll be able to get a handle on your cash flow management issues.

  • Try to enter all of your business expenses as quickly after a purchase as possible. This will help you keep your cash flow current.
  • You may want to categorize common expenditures in one general category. For example, all of your utility expenses could be categorized under overhead.
  • Pay your bills on time. Not only will that help your business credit rating, but it will also keep you in good standing with your vendors. You need your vendors to supply your business, so keeping them happy is helpful.
  • Seek out new ways to bring in additional revenue. What if you had tasting events at the winery, for example, with specific themes to add to the fun of wine tasting? The more customers you bring in, the more wine you’ll sell.
  • Make handling your cash flow a top priority or a business goal. If you focus on cash flow, your management of business expenses should become less of an issue.

Feeling a bit overwhelmed by your cash management issues? Need help with managing your finances for your winery? You should contact Protea Financial. We have been working with vineyards and wineries for nearly two decades. In fact, wine bookkeeping, accounting, and inventory management are our specialties. We can even provide contract high-level financing help, such as a constructive cash flow analysis. Why not contact Protea Financial today, and let us help you grow your wine business?

Protea Financial Is Here to Help with Cash Management

Cash management for wineries is more complicated than most other businesses. For help keeping the documentation straight, give us a call here at Protea Financial!

What Is COGS? And, Why Should I Care? An Introduction to Costing

What Is COGS? And, Why Should I Care? An Introduction to Costing

Small business owners who look at balance sheets regularly are in the minority because there are many other demands on their time. Understandably, business owners would want to worry about staffing, marketing, and customer service before thinking about those columns of figures. However, business owners who wish to grow their business moving forward read and understand the numbers for the COGS. Do you know what COGS stands for and why understanding COGS is so important for the health of your business? Keep reading to get information to help keep your business moving.


What Is COGS?

The term COGS stands for Cost of Goods Sold. Your “goods” may be either goods or services you provide to your clients. You may have seen COGS as COS (Cost of Supplies or Cost of Services) as well. No matter which acronym you use, the figures for COGS are essential because they sum up how much it costs your company directly to produce your product or service.

The COGS numbers are a review of expenses for your company. Usually, the numbers are calculated for the same month you calculate your revenues. COGS numbers don’t include the costs of selling your product or administrative expenses. General business expenses (such as pencils) are usually not covered by the COGS numbers. Instead, you can find those numbers by the acronym SGA (Sales, General, and Administrative)  or SG&A (Sales, General & Administrative on your balance sheet or on a profit and loss statement.


Why is COGS Important?

The numbers around the COGS are vital for your business. Because there are several numbers involved, let’s look at all the information in the COGS figures and why you need to look at the numbers closely.

Protea Financial 7.14.22B COGS

Direct Materials

Direct materials represent how much you had to pay to make your product. Direct materials are consumable pieces that go into making a product to sell. People call direct materials raw materials because you must have these materials to make your product. For example, if you make chocolates to sell, one of your direct materials costs would be the cocoa powder you bought for your chocolate. Unlike most other cost numbers, the direct materials fluctuate up and down because the market drives it. The direct materials costs will be lower during some months than in previous months.

For example, gas prices at the beginning of the pandemic were less than $1.50 per gallon because no one was driving their personal vehicles. However, gas prices have skyrocketed with more people driving, the war in Ukraine, and the lack of supply to meet the oil demand. Because the gasoline prices have been so volatile, people who use gas as part of their business, such as landscapers, have seen their direct costs increase substantially over the last two years. Also, because transportation goods for all manufacturers have increased, you may notice you are paying more for raw materials than ever before because your suppliers are passing their increased expenses to you.


Direct Labor

Direct labor numbers show how much you had to pay employees who produce your product or service. If you owned a chocolate factory, direct labor costs would be for anyone employed to produce your chocolate. Direct labor costs can include full-time and part-time employees, as well as temporary employees, if you hired them during a surge in production. If you had employees who worked overtime in your product’s production, those numbers also need to be reported here. Remember that labor costs for sales and administrative people are not reported here.

There’s more to the direct labor cost than just salary or wages; all the payroll taxes for your employees also belong in the direct labor cost. You can also include figures for unemployment insurance, Social Security, and Medicare costs here.

If your company pays incentives or bonuses for great work or employee retention, you should be able to list those under direct labor costs as well. If you give your employees gift cards as an incentive, you cannot list that here since it isn’t money you paid out as wages.



Not every business counts supply numbers in the COGS. However, if you have to use supplies to manufacture your product to sell, such as wrappers or packaging, you could put those figures in the supplies column.

There are several items you could list in your supplies figures, but they are usually broken down into two categories. First, there are your factory supplies. These are supplies that are needed in your manufacturing processes, such as those wrappers and packaging. Also, soap, cleaners, and janitorial supplies can be listed here as well. You may also have items such as hangers, silica, and other supplies used to prepare the product for shipping, such as boxes and labels.


What Is the COGS Used For?

Business owners need to be familiar with the COGS because they directly affect their businesses. First, the COGS is used as a marker for figuring out your business net income. Your net income is vital come tax time. If you want to use the COGS to make deductions on your business taxes and reduce your tax liability, you need to keep meticulous records of your monthly costs.

Second, businesses can use the COGS as another lens to look at their business’ overall health. If your business is spending less money to make the items you sell than it is taking in during sales, your gross profit margin will be higher, which signals that your business is healthy. Suppose your business is spending more money to sell the product than you are taking in for sales, especially over a long period. In that case, you may need to reduce your expenses to continue having a healthy business. Your gross profit margin is like a traffic signal for the health of your business.

Third, the COGS represents a line item on your profit and loss statement. Still, many potential sources of additional financing look at the COGS to decide whether or not to invest capital into your business. If you want to expand your business, for example, a lender is going to look at your COGS to see if you have healthy sales numbers to justify expansion.

Your COGS may also show deficits in your overall marketing and sales plan. For example, if the cost of your materials hasn’t risen substantially, and sales of your products remain fairly constant, but your business isn’t increasing its sales the way you would like, it may be time to look at your spending in sales to make sure you are getting your money’s worth from your sales department.


What Isn’t In The COGS

Your overhead is perhaps the largest expense that isn’t included in your COGS. Overhead costs are defined as those costs a business incurs each month whether they sell any of their product or service or not. Overhead costs would include the amount of rent or mortgage you pay on your office space, factory, or storefront. Utilities would be included in overhead costs as well.

Overhead costs include insurance for the building and contents because most small business owners need business insurance to do business. Many businesses also list office supplies not related to manufacturing here, and business owners also list large office costs here, such as computers, office phones, and office furniture. You might also list maintenance fees for the building and grounds here as well.

Protea Financial 7.14.22B Winery COGS

Why Should I Care About COGS?

It can be difficult as a business owner to interpret all of the figures swirling around your business. The larger your business grows, the more difficult it can be to take time to look at your business figures, especially in this economy. So many businesses are trying to reconfigure the cost of doing business in the pandemic era that it can be hard to look at numbers at the end of the day.

However, because your COGS directly relate to the health of your business, you need to create time to digest those numbers on your balance sheet. COGS can affect your cost of doing business for months and years into the future since the numbers are used as a business health checklist for lenders and insurance companies.


Turn to Protea Financial for Help Understanding COGS and How It Applies to You

If you don’t know how to read your business financials, including COGS, there are ways you can get proficient at it. You can begin by studying those financial terms online to get an introduction to financials. However, there are companies that help business owners make sense of all of those numbers. Protea Financial has been working with small business owners for nearly two decades. We can help you with bookkeeping, accounting, and inventory management. If you need help making sense of your business numbers, we can help. Contact Protea Financial today, and let us help you move your business forward today.

Protea Financial Can Make Understanding Your COGS Much Easier

Understanding your Cost of Goods Sold, or COGS, is important. It is vital to keeping your business healthy! Contact us here at Protea Financial for help understanding it all!

A High-Level Look at Bookkeeping Tasks

A High-Level Look at Bookkeeping Tasks

If you are tired of looking at that giant pile of receipts on your desk that doesn’t seem to ever get any smaller, there’s something you can do about it right now. You can begin looking for a bookkeeper to hire. If you are a business owner who is considering hiring a bookkeeper, you may be wondering what they actually do that would help your business. Bookkeeping isn’t just hiring someone to keep track of all of those receipts. Bookkeeping involves many higher-level financial skills that you may not even be aware of. Hiring a bookkeeper may really help your business grow and prosper. Here’s a breakdown of all the high-level things that a bookkeeper does.


Keep Financial Records

One of the most important things a bookkeeper does is to keep your financial records. Many business owners assume that all bookkeepers do is to organize financial records. However, bookkeepers actually do much more than that. Bookkeepers keep track of all of your incoming income and outgoing expenses, which makes everything in your business run more smoothly. Bookkeepers can create, organize and maintain all of your financial records. Your records will move from a system of haphazard folders and stacks to computerized, systematic, accurate records.

Not only will your bookkeeper keep all of your financial records organized and accessible, but they can produce easy to read reports. These reports can help give you a snapshot of the health of your business each day, week, or month. Bookkeepers can even produce year-end reports so you can picture where your business was successful in the last year, and where it may need some work. This information can help you make better decisions for your business in the long run.

Protea Financial Financial Records

Manage Accounts

Many business advisors suggest that the average small business have at least three accounts. You should have one checking account for your accounts payable, one savings account for your accounts receivable, and a high yield savings account for long-term business savings. If you have a business loan from a broker or a federal loan from the Small Business Administration, you may have a separate account. Businesses who open more than one location tend to have a checking account for each of their location. All of these accounts can add up to a headache for you as you try and balance them all.

Bookkeepers also can manage all of your business accounts. If you operate as a sole proprietorship, you may only have one account, but the larger the business is, the more financial accounts you may have. It can be difficult to keep all of your accounts straight, but with a bookkeeper, you don’t have to. In fact, no matter how many bank accounts you have, your bookkeeper can manage them, and give you reports on the state of your accounts. When you have someone else managing your financial accounts, you will be able to move money between accounts quickly and keep all of them prepared for your next round of transactions.

Also, because bookkeepers work constantly in the financial sector, they may be able to save you money on all of your banking and account transactions. For example, your bookkeeper may determine that changing financial institutions will save you hundreds of dollars a month—money you could put back into your business.


Handle AR/AP

One of the most important roles your bookkeeper can help you with is your accounts payable and receivable. When businesses talk about accounts receivable (AR), they are speaking about money the business takes in, through invoices, bills of sale and statements. An accounts receivable balance sheet lists all money owed to a business that hasn’t been paid yet.

In contrast, accounts payable (AP) represents short-term debts that a company owes. These debts might be to vendors you buy products from, or vendors that provide services for your company. Utilities can also be considered accounts payable. You can also add other short-term debts to the accounts payable list, including pest control, wholesale business orders of supplies and even short-term loan payments.

Accounts receivable and payables are a large part of business recordkeeping. With a bookkeeper keeping your incoming and outgoing paperwork, your accounts receivable and payable will be better organized. Most large businesses keep double ledger entries, and your bookkeeper can get a ledger entry system started for you so that you can have as accurate a snapshot of your business as possible.


Guide Financial Decisions

When you first started your business, you most likely guided yourself, and you made decisions based on prior business knowledge you honed over the years. However, as your business grows, you not only have to manage larger financial transactions with a larger customer base and far less time. It’s time to find a guide who can focus on finances and let you focus on other aspects of your business. With all of the information a bookkeeper can offer you, your financial decisions will be easier to make. You’ll be able to base your decisions on solid financial backing. A bookkeeper’s information may also be able to help you secure additional funding, or make decisions about hiring additional employees.

Also, you may not understand the financial standards that lending institutions, creditors, financers, and even potential investors will look for when you want to move your business forward. In fact, there’s a set of standards called the General Accepted Accounting Principles (GAAP) that most businesses use to set up finances. Your bookkeeper and your accountant will use these same principles, and it will make continuing to improve your business’ financial position far simpler.

Protea Financial Wine Inventory Management

Inventory Management

No matter what kind of business you have, you will have inventory. You may have a little inventory consisting of office and cleaning supplies. You might be part of a medical practice with a medical supply inventory. If you sell to businesses or individuals, your inventory may be extensive. Like nearly everything else with a business, your inventory continues to grow the larger your business grows. In fact, if you don’t take care of the inventory in your business, your lack of inventory control could spell failure. One of the top 10 reasons businesses fail is due to inventory mismanagement.

Bookkeepers can help you with inventory control. If inventory control is essential to your business growth, why not allow your bookkeeper time and money to manage it? Many bookkeepers have inventory expertise, and if you give someone else control ordering and cataloguing, you free up needed time. Inventory control helps you to manage your business more effectively, and even move towards more accurate ordering in the future. Inventory control can be a great way to save some money.



If you began your business as a sole proprietorship, you most likely weren’t paying anyone including yourself. Now that your business is growing strong, you may be faced with employees who have moved from contract labor or part-time labor to full time with benefits. Payroll with fulltime benefits means you’re now keeping track of payroll taxes. These payroll taxes require you to make payments to the state and feds. You also have to contend with pension, retirement or social security benefits as well. With a bookkeeper, payroll becomes much easier for you to manage. Bookkeepers can prepare payroll and keep track of payroll reports. You can track all of your payments and decide which employees to give raises to. Wouldn’t it be nice to spend time giving benefits, raises, and employee profit-sharing, rather than wasting time with payroll spreadsheets?



Turn to Protea Financial to Get Help with Your Bookkeeping Tasks

While many business owners see bookkeepers as simply spreadsheet keepers, bookkeepers are able to perform high-level accounting and inventory functions. Hiring a bookkeeper will cost you money in the short term, but it may be one of the best business decisions you ever make. Bookkeepers can work to streamline your financial process, and allow you to focus on financing, hiring the right employees, keeping your customers happy and attracting new business through marketing and customer outreach. If you need help finding the perfect bookkeeper for your business, we can help. We have specialized bookkeepers and accountants who can become valuable business allies. Contact Protea Financial today, and let us help you connect with a wonderful bookkeeper.

Protea Financial Can Help You with Your Bookkeeping Tasks

Contact Protea Financial now for help with any of your daily, weekly, monthly, or yearly bookkeeping tasks!

The ABCs of Financial Statements: Understanding the Balance Sheet

The ABCs of Financial Statements: Understanding the Balance Sheet

When you own a company, you are responsible for keeping track of its finances. This process involves compiling and analyzing different financial statements on a regular basis. These documents provide insight into the health of your business and how profitable it is. The financial statements are essential when you want to know about the financial condition of any given company or business. A balance sheet is a snapshot of your company’s financial position at a particular point in time. It shows you if you have enough cash, assets, and other things of value to continue operating your business, and also indicates how much risk your company is taking with its current capital and asset balances. Keep reading to understand more about the balance sheet and its importance.


What is a Balance Sheet?

A balance sheet is a financial statement that reports an organization’s assets, liabilities, and equity at a specific point in time. It is a snapshot of a company’s financial position at a particular point in time. It is important to note that a balance sheet is different from a profit and loss (P&L) statement, which reports a company’s earnings over a period of time, such as a fiscal quarter or fiscal year.

Companies use a balance sheet to account for the value of the assets they own (what they own), the amount of debt they have (what they owe), and the amount of equity they have (what owners have invested). The balance sheet is one of three key financial statements reported by public companies in the United States.


Types of Balance Sheets

There are two types of balance sheets: the single-step and the double-step.

  • The single-step balance sheet is a statement that presents an asset, liability, and equity account as a single figure for each item.
  • The double-step balance sheet combines the asset and liability account into a single figure, then shows the single figure as a single figure for each item.

Protea Financial Balance Sheets and Other Financial Statements

The Basics of the Balance Sheet

The balance sheet shows a company’s assets on one side and its liabilities and equity on the other side. A company’s assets are what it owns, including cash and anything else that has value (such as equipment, inventory, real estate, etc.) The liabilities side of the sheet shows what the company owes (for example, money owed to suppliers, employees, or other companies, etc.).

Equity is what owners have invested in the company plus any profits from historical periods. The total of these three items on each side of the sheet must be equal:


Assets = Liabilities + Equity


Assets on the Balance Sheet

The assets section of the balance sheet is where companies record what they own. These include cash, accounts receivable, inventory, real estate, and equipment. Cash is the most liquid asset and is what you have on hand to pay bills and fund daily operations.

Accounts receivable are amounts that customers owe the company for products or services. Inventories represent raw materials, work in progress, or finished goods that are ready to sell. Real estate is the land and buildings owned by the company. Equipment represents machinery, tools, and other items that have a useful life beyond one year.


Liabilities on the Balance Sheet

The liabilities section of the balance sheet is where a company records what it owes. Types of business liabilities can include accounts payable, short-term debt, and long-term debt. Accounts payable are amounts owed to suppliers and vendors. Short-term debt represents loans with maturities of less than 12 months. Long-term debt represents loans with maturities beyond 12 months.

There’s another kind of liability or asset you may have on your balance sheet, and that is contingent assets or liabilities. These items might be added to your balance sheet depending on the outcome of a set of factors. For example, if one of your vineyards you lease is growing grapes that are suddenly in high demand for white wine, you may be able to increase the rent on your lease, since the profit margin for the grapes is higher. This could be counted as an asset.

A contingent liability would be a lawsuit. For example, if your company is being sued for copyright infringement because you and another company disagree on a trademark, you may have to pay damages if you lose the lawsuit. These losses that haven’t happened yet can be counted as a contingent liability.


Equity on the Balance Sheet

Equity is what owners have invested in the company. This could be a start-up business that has raised venture capital, or an established company that has issued shares on a public stock exchange.


Financial Liquidity Versus Solvency

The two primary concerns of a company regarding liquidity are the ability to pay its expenses and the ability to meet its debt obligations. These two concerns are often closely intertwined because if a company cannot pay its operating expenses either because it is running out of cash or because it has spent all of its cash reserves, then it will not be able to meet debt obligations.

Liquidity refers to the ease with which a company can access funds. It is measured as the availability of cash and/or securities that can be converted into cash at some point in time. A company’s solvency is concerned with whether or not it has enough assets to cover all of its liabilities, including short-term liabilities like daily payroll. Solvency also includes long-term liabilities, such as pensions and long-term debt.

Solvency is a function of liquidity, or how much cash a company has on hand and what kind of assets it has available to cover debts. The two are related, but solvency is more about the financial health of a firm. Liquidity refers to whether or not a company can pay its debts at any given moment in time. If a company is short on cash, it may run into trouble paying creditors and may even have to declare bankruptcy if it cannot get more money quickly enough, while solvency means that the company will still be able to meet all its liabilities.


Keep Your Financial Statements Accurate

It is essential to always keep your financial records accurate by recording any changes to each statement when it occurs. When you make purchases or investments in assets, these will increase your assets on the balance sheet. For example, you purchase new equipment for your business, which will add a new asset of equipment to your balance sheet.

When you make payments for liabilities, this will decrease your liabilities on the balance sheet. For example, you pay off a supplier or vendor for services or products that have already been provided. You also pay off your rent for your business premises.

Protea Financial Understanding Balance Sheets

Determine Which Reporting Date Or Reporting Period Your Business Is In

The reporting date is based on the fiscal year. Fiscal year (FY) versus calendar year can be confusing, but it’s important to understand what both terms mean. A fiscal year is the period of time when a company’s financial statements are prepared. This can range from July 1 to June 30, with some companies starting their fiscal year on January 1 and ending on December 31. A calendar year is the 12-month period used in most countries, including the United States. In general, fiscal and calendar years differ in length but not in purpose, as they are both used for accounting purposes.

However, there are some cases where one will be used over the other: Individual investors sometimes prefer using a fiscal year because it is a more accurate representation of a company’s operations than a calendar year.

For example, it may be better to use FY2020 instead of FY2021, which could result in an undercount or overcount leading to an inaccurate overall picture of the business. On the other hand, companies often use calendar years for tax reporting purposes because this is what is required by law.

In addition, individual investors may prefer to use a calendar year for convenience, such as knowing that their holdings will be included in annual tax filings every April 15th rather than having to track them separately each quarter or month.


The Quarter System

Every balance sheet uses the quarter system. The business quarter system breaks down the year into four parts, with three months in each quarter. The first quarter (Q1) represents business in January, February and March. The second quarter (Q2) represents the business you do in April, May, and June. The third quarter (Q3) represents all of the commerce you have in July, August, and September. The fourth, or final quarter, represents your business in October, November, and December.

It is important to understand the shorthand for the quarter system, as so many documents rely on the abbreviation as a type of financial know how. For example, if you have a huge tax bill to pay in April, that would be a liability in Q2. If you have a huge sale of equipment in August, that would be an asset in Q3. These quarters allow you to read a balance sheet more effectively and help you understand your business moving forward.


Why Are Balance Sheets So Important?

Many small business owners wonder why they need a balance sheet of their business at all. You may have been working in your small business for years without ever needing a balance sheet at all. However, if you are looking to expand your business, create more demand, or even explore new business areas, it’s important to check your balances.

Think about a balance sheet as a health care report. You need to make sure you have checkups with your doctor to maintain your health. You need to know what’s going on with your health so you can make better decisions. It is the same with the health of your business. Not only is your balance sheet a snapshot of your business health, but it can also be a roadmap to better business decisions, which leads to a healthier bottom line.

The more you know about the health of your business, the better decisions you can make. Using the date on your balance sheets allows you to choose what to work on, where to cut expenses, and when you have the financial ability to grow. It can also give you insight as to whether or not your business is carrying too much debt, which may mean changing around how your business operates.


Protea Financial Can Help You Understand Your Balance Sheet

All businesses need a method of reporting their finances so they can see how profitable they are and how much they are worth. Financial statements, such as the balance sheet, help you track your assets and liabilities, as well as your equity. The balance sheet is a simple way to summarize your company’s financial situation. It shows what you own, what you owe, and what you’re worth. If you want help keeping your books straight, or help understanding your balance sheet, then contact Protea Financial today. We are here to help!

Protea Financial Can Help You with Your Financial Statements

For help understanding your financial statements or understanding the importance of your balance sheet, call us here at Protea Financial. Our team of experienced financial experts are here to help!

Supervisory Training – A Critical Investment

Supervisory Training – A Critical Investment

As with many cycles in business and life, our country has reached a point in time when generations are moving into different stages of their lives, giving rise to new opportunities for less experienced individuals.  The shift brings about a mixed bag of challenges and benefits.  There is likely sadness and some grieving as experienced, tenured leaders phase into retirement and turn the reins over to the next generation.  Similarly, there could be enthusiasm and excitement for the changing in tides resulting in new energy and ideas.

In addition to the emotional roller coaster are the challenges companies face when they find themselves in a position where a larger percentage of their newly promoted supervisors are green and require development to reach the same level of experience as those leaving the organization. Companies that recognize the shift and proactively invest in building leadership throughout their organizations now will reap the rewards of those efforts for years to come. Most importantly, an organization that chooses to invest in its leaders shows that they care about their development, which results in leaders who are motivated, confident, and loyal.

Many individuals are promoted to supervisory positions because they became technical experts in their previous jobs.  Transitioning from individual contributor to having one’s job success depend upon the efforts of others is challenging, especially when they were once your peers. New supervisors must understand that their new role is to achieve results through directing, motivating, and managing the work of others, and that can be a very difficult reality to come to without proper knowledge and tools. It requires mastering a new set of skills. Leaving a new supervisor to figure it out for themselves is a recipe for frustration and higher turnover at best and failure for the individual if not organization as a whole at worst.

Protea Financial Overwhelmed Boss

Scenario I

An individual is promoted to supervisor, leading a small team. The new supervisor had mastered the skills required to do the job and seemed eager to take on their new role, feeling motivated to work even harder than ever before. Recognizing all the normal challenges they have heard from peers who were also recently promoted, they decided to take their commitment to the company, and their new position, to a different level. As new projects came in, the supervisor took them on instead of delegating. Soon after assuming the role, the supervisor was so busy they didn’t have time for their direct reports, and they became a bottleneck in the system. Other employees were less effective and frustrated. The supervisor felt overworked and angry that they were doing all the work. As a result, turnover increased.


What happened?

In a lot of cases, new supervisors love the work they do and letting go is difficult. Often supervisors stay in the weeds for a few reasons including a fear of failure, a desire to impress their bosses, and ensuring the job is done “correctly.”  The supervisor in this example was a skilled worker, but they didn’t know how to manage. Effective supervisory training would give this supervisor the tools they need to direct, motivate, and achieve results through the efforts of others.

Protea Financial Taking Sides

Scenario 2

This supervisor, a long-time vineyard worker, was promoted to Crew Lead in recognition of their hard work and dependability. Everybody liked the recently promoted supervisor, their competence, and their work ethic. The supervisor was a good friend to all. In this new role, they were expected to communicate company objectives to the crew, give performance feedback, and manage conflict as well as train and support the members of the work crew. When a problem arose between two team members, the employer asked the supervisor to take corrective action. The supervisor responded by taking sides, which caused other employees to take sides and the conflict deepened.


What happened?

In an ever-changing work environment where communication practices become increasingly difficult,

supervisors must learn how to resolve conflict and uphold standards set by the company without being influenced by historical work relationships. Employers sometimes overlook the reality that the knowledge and interpersonal skills required to do technical work well are often very different from the people skills required to succeed and thrive in a job supervising the work of others. By learning a few different approaches to communication, this supervisor could have handled the situation more effectively and earned respect from old peers in their new role.

Protea Financial Improper Training

Scenario 3

In this third and final example, the newly promoted supervisor had the communication skills and ability to effectively lead their team, but they lacked the training to recognize potential employment risks. As a result, when one of their direct reports began to have attendance issues, the supervisor was quick to want to terminate the employee.  In a feedback discussion, the employee divulged that they have a medical condition they are struggling with and that has been the cause of the attendance issues.  The supervisor told the employee that they are sorry they have medical issues, but they cannot continue to tolerate the absences and tardiness because it is causing an increase in everyone else’s workload. The employee quit on the spot and filed a claim against the employer stating they were coerced to quit and it was retaliatory on the basis of their medical condition.


What happened?

Unfortunately, in this scenario, the supervisor was only thinking about operational needs and the challenges that absenteeism was posing on the team and their productivity.  Since the supervisor had never encountered a need for leave or accommodations themselves, they did not recognize that this situation warranted a different approach. Supervisors are agents of the business for which they work and represent.  As such, they are required to recognize when an employee may require a leave of absence, intermittent leave, or disability related accommodations, among other issues that warrant a visit with human resources. They may not recognize when an employee’s performance or attendance struggles are related to a protected right that should be appropriately addressed.  The lack of knowledge in recognizing these types of issues can create significant liability for the employer, and potentially the individual supervisor as well.  Foundational compliance training would have saved this supervisor and the company from having to face a legal claim.

Investing in the professional development of supervisors and managers strengthens your entire organization by institutionalizing the knowledge and technical skills needed to be effective, and helps create a clear culture that backs the organization’s mission, values and objectives. More importantly, investing in your internal talent pool will create a more successful succession plan and will prepare you for the next generational transition.  While there may be some resistance to making the investment because of the current trend in resignation, the training paradox, supported by decades of data, tells us that the more a company invests in their employee’s development the less likely they are to leave overall.  Furthermore, those same leaders will in turn also invest in the development of their direct reports, upskilling the entire workforce over time.  Supervisory training is one part of a multi-faceted workplace culture, performance, and retention plan.  Over time, supervisory training can contribute to more efficient operations, higher productivity, fewer mistakes, greater job satisfaction, higher retention, and better morale. It takes a commitment, time and money, but the end results are well worth it.


Gabriel Cox is a Senior Trainer and Coach and golbou ghassemieh is the Operations Manager & Senior Consultant with The Personnel Perspective, an HR consulting, leadership training, and recruiting firm with senior level human resources professionals serving the North Bay since 1987. Contact The Personnel Perspective at (707) 576-7653.

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Information Your Bookkeeper Needs from You

Information Your Bookkeeper Needs from You

The pandemic has changed many of the types of business success stories. For example, one local restaurant saw their business traffic fall to nearly nothing in the face of pandemic shutdowns. Instead of closing the business, the restaurant switched to carryout and delivery of food and liquor, and thrived. Your business has managed to thrive as well, and you may be wondering what your next step should be. You need to think about hiring a bookkeeper.

Small business owners are often worried about a lot of things, but hiring a bookkeeper isn’t typically one of them. Starting a business means you are trying to decide when to open a location, hire employees, and apply for business loans to expand. The last thing many business owners worry about is a bookkeeper, but it should be higher up on your list. Small business owners usually take their time hiring a bookkeeper because so many other details need their attention.

Business owners focus more on getting and maintaining customers, marketing, product placement, employee retention, and making their business as appealing as possible. Once a business owner hires a bookkeeper, nearly 90 percent of them say they will never go back to life before a bookkeeper. Why would they, when a bookkeeper saves them both time and money?

If you are new to having a bookkeeper on your staff, or you are thinking it is time for you to hire a bookkeeper for your business, there are items you will need to begin saving for your bookkeeper and information your bookkeeper needs to make sure your business continues to prosper. Here are the items your bookkeeper will need to do their job.

Protea Financial Save Your Receipts

Save Your Receipts

Collecting receipts from your business means that you need to find a place for all of that paper you’ve stuffed in your wallet or in an envelope sitting on your desk. One of the most important items your bookkeeper needs are your receipts. You may have never saved your receipts before, especially if your business is small and growing, but now is the time. Bookkeepers are all about keeping track of your money that comes in and goes out of your business, so receipts are extremely important.

Your bookkeeper will need all of your business receipts. If you’re questioning why receipts are important, here is an explanation of their importance to your money and your business financial records.

First, if you keep your receipts from business expenses, both your bookkeeper and your accountant can use them to justify your tax returns at the state and local level. One of the reasons business owners intensely hate doing their taxes is because of the paperwork involved. With receipts, you’re able to justify your expenses for your business taxes. For example, if you take clients to business lunches or dinners, you can deduct that expense from your taxes. If you eat a lot of lunches and dinners out during the year, the money adds up. It will be worth it for your business to keep track of where the money went. If you get money back on your taxes, you may be able to buy new equipment, find a larger office space, or hire new employees.

Also, while auditing of business taxes is more rare than audits for personal taxes, one out of 100 business are audited yearly. The average time businesses spend on an audit is from three to six months—if you have your paperwork in order. If you aren’t organized, a business audit can take up to three years or longer to complete. No one wants to go through an audit, but if your business is audited, all of those receipts you saved will be used by your accountant to justify your business expenses.

Another really important reason you’ll want to save your receipts to give to your bookkeeper is to reconcile your business accounts. Bookkeepers excel at reconciling your business accounts, so that when you look at your banking information, your accounts will be current and perfectly balanced. This is a giant time suck for business owners, so handing over receipts means a lot less time you waste on your bank account balances.


Your Bills and Invoices

Businesses get bills and invoices in the mail daily, and you may be tempted to toss those bills in a tray and forget about them for a few days. Taking the time to input bills and invoices into your business records can be time consuming. However, instead of putting those bills and invoices in a tray, put them in an envelope or accordion folder to give to your bookkeeper. First, if you pay your bills, and put them in a folder, you will be able to manage your business money more effectively. Second, if your bookkeeper keeps track of your bills and invoices, when something doesn’t seem right, and you know you paid an invoice, even though the business says you didn’t, you can prove it thanks to your bookkeeper.

Keeping track of your bills and invoices means that you have a paper trail for taxes, because invoices and bills are part of a business’ tax liability. Your bookkeeper will also be able to balance your accounts so you always know where your money is going.  The larger your business grows, the more important it will be to keep track of all of your income and outgoing expenses as part of your business assets and liabilities. If you are looking to find additional financing, your prospective lender needs an accurate record of all of these expenses. It’s time to get all of your money in order.



Deposit Slips, Canceled Checks, and Banking Information

Some business owners use electronic checks or online banking, and never write paper checks, while others use a combination of paper and electronic checks. No matter what kind of checks you use, you need to give your bookkeeper your banking information for them to do their job properly. Your bookkeeper will use the information to keep track of the flow of money coming into and going out of your business accounts.

Business owners are increasingly concerned with business fraud, and they need to be. Fraud affects thousands of small businesses each year, and the average cost of fraud for small business averages in the hundreds of thousands of dollars. If you are concerned about giving your bookkeeper all of your banking information, there are ways you can limit their access for your security. Be sure and ask your bank or credit union how you can limit your bookkeeper’s account access to protect yourself and your business.



Information About Your Business

Your bookkeeper needs information about the type of business you’re running in order to keep your records properly. You need to give them information about what your business does, where the income and liabilities are in your business, and how many employees you have. You’ll want to share your mission and vision, as well as the goals and objectives for your business moving forward. The more information you can give your bookkeeper about your business, the better your bookkeeper can help you keep your business moving forward.

Protea Financial Payroll Information

Payroll Information

One of the largest expenses any business has is payroll, especially now. The Covid-19 pandemic and the Great Resignation have left business owners with huge payroll expenses. In fact, payroll can account for between 15 and 30 percent of your business’ gross revenue.

Your bookkeeper needs access to payroll information in order to keep your business taxes current and ensure that employee withholding is correct. If you are behind in your payroll taxes, you can face state and federal penalties. Your bookkeeper can ensure you are paying the correct amounts in payroll taxes to the government.


Tax Documents

You will want to give your bookkeeper access to all of your business tax records dating back to when your business opened. If you’ve been in business for a long time, you can give your bookkeeper access to your tax documents from the last seven years. If you allow your bookkeeper access to your tax documents, they will be able to keep track of your tax debts and payments at the federal and state level. This will help your accountant track your tax expenditures and give you forecasts for your tax liabilities moving forward. Businesses who are able to plan for tax expenditures won’t be surprised with a huge tax liability in the new year.


Contact Protea Financial for Help with Your Business Bookkeeping

While you’re pondering what your next move in business should be, you need to consider hiring a bookkeeper. While hiring someone to help you keep track of your business income and expenses will cost you more money upfront, it’s worth it. Hiring a bookkeeper is essential for any small business on the move. Your bookkeeper will save you both time and money in the long run. No matter whether saving time or saving money is more important, a bookkeeper can help you accomplish both, not to mention saving you hours of worry and stress. If you need help finding the perfect bookkeeper for your business, we can help. Protea Financial has bookkeepers that can help you get your business books in order, no matter what your business is. Contact Protea Financial today.

Let us Help You Gather the Information Your Bookkeeper Needs Now!

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