CPA is not your cash flow expert!

In my last newsletter we highlighted the possibilities of adding value to your team of subject matter experts by surrounding yourself with both a CPA and a CFO or Cash Flow Consultant to help you optimize cash flow and maximize profitability.   Your CFO should be helping you with proactive financial strategies.  The CPA, your tax compliance expert, takes the opposite approach, viewing finances from the rearview mirror as a reactive strategist. I find it unfortunate that we business owners are usually groomed to manage our businesses from a tax perspective.  What if you combined the financial conversation of how much taxes will I owe this year with how much cash do I need to reserve now to  pay those taxes?

My Dirty Little Secret around working with CPA’s is that you can be profitable and have a cash flow problem. A common circumstance is when the business profits pass through to the owner’s personal tax return and the owner owes a large sum of taxes but doesn’t learn that fact until the taxes are due in April. This scenario confirms another Dirty Little Secret: The CPA is your tax compliance expert—NOT a cash flow expert. You can avoid these kinds of cash flow storms by considering the value of working with both subject matter experts; one to answer the question of “What is my tax liabilities projected to be for this year?”.  The other to help you plan for cash requirements, and both working together to get more money into your pockets.   

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