How do I keep track of my business's money?
June 23, 2006 12:49 PM   Subscribe

Our company needs a way to keep track of money. And not in the "Quicken" sense - we need a way to track how much we can spend and how much we need to reserve to pay invoices. This is a little confusing, example inside.

We are a product sourcing company. Basically, we import stone, building materials, etc for builders and resellers.

We have a client who makes a $100,000 order from us. We require 50% up front, giving us $50,000 in the account.

Let's say that the order costs us $70,000 from the manufacturer. The manufacturers require 30% up front, so we would pay the manufacturer $21,000 (30% of $70,000). So now we have $50,000 - $21,000 = $29,000 in the account.

Upon shipment, the customer owes us the remaining 50% and we owe the manufactuer the remaining 70%. So we would get another $50,000 from the customer and we would pay the remaining 70% ($49,000) to the manufacturer. This would give us $29,000 + $50,000 - $49,000 = $30,000

This is easy to keep track of with one or two projects. But I'm worried about keeping track of 5 - 10 or more projects. I don't ever want to be in a position where I have to come up with the money to pay an invoice that is due. I also want to be able to figure out, for any given project, how much has been paid, how much is owed, and what my profit on the project is. For some projects there may be as many as 12 or more months between the order and the final shipment.

Any ideas? I'd also like to hear ideas for invoice tracking software or any other kinds of software you guys think would help me out.
posted by andrewdunn to Work & Money (3 answers total)
Have you tried QuickBooks? You can use it for A/P, A/R, payroll, taxes, etc. I find it very helpful to have everything in one place.
posted by sfkiddo at 1:02 PM on June 23, 2006

Budget uses the envelope method and sounds like the sort of thing you're looking for.
posted by evariste at 1:16 PM on June 23, 2006

Not the answer you're looking for, but it sounds like you could benefit from a college-level financial accounting class (or hire somebody who already has). Having some spiffy software is only going to do you so much good if you don't have a grasp of accrual-basis accounting. I'm talking about elementary stuff like Assets = Liabilities + Owner's Equity, or knowing how record cash flows in a double-entry system. Your whole business as a unit goes far beyond tracking invoices and accounts payable. I'm serious -- if you can find a way to take a semester-long class in accounting 101 it will completely change your concept of keeping track of your company's cash. If you can't, look into getting an accountant on the case -- it could get unmanageable fast.
posted by brain cloud at 6:32 PM on June 23, 2006

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