Here’s a word for you: TIPO. I know, it’s not actually a word. It’s an acronym and an idea to help the business owner navigate, or avoid completely, the jargon of banker
TIPO: Took-Ins and Paid-Outs
How much money did we have come in this week and how much money did we pay out this week? And how much, if any, is leftover. – those are profits!
Accountants and bankers use a different language than business owners and entrepreneurs when discussing money. When I was starting off, my first bookkeeper Sue, talked about credits and debits in bookkeeping. I’ve always considered myself a numbers guy and ironically, I passed college-level calculus but failed accounting.
The problem with credits and debits? They can be good or bad. I told Sue, enough. What I ultimately want to know is how much money I have and how are things “looking”?.
When we find ourselves in the starting phases of our business, we often don’t have the confidence to tell our accountants and bankers that we have no idea what they’re talking about. But we need their input and advice.
I asked Sue to talk about Took-Ins and Paid-Outs. I was a little embarrassed for anyone to overhear so I pulled the door shut so that we could talk in private.
How much money came in this week and how much went out?
I want to encourage you to develop your own comfortable communication with your “finance” people in your life. It is essential that you feel comfortable in having your service providers talk with you about your business in a way that you can understand them. After all, it is your business, right?
When things get confusing to try this trick. Feel free to use these words exactly:
“Hey, I’m confused. Would you explain that again like you’d explain it to a 4th-Grader so I can understand it. I can tell this is important and I really want to wrap my head around it.”
Now you know the secret. Be willing to be genuine and ask them to explain it better. It really is their job to be good at explaining things to their customers. That’s you! Often we blame ourselves for not being smarter but the real truth is the people we are paying to help us need to meet us where we are and not the other way around.
I’m going to let you in on another secret method of mine. If you understand and keep track of these five things, you will know everything you need to run your business well.
The Five-Part Method on Analyzing Financials
- Who owes me money?
- Who do I owe money to?
The financial management of your business never needs to be more complicated than that. This is the method to use to keep track of your finances along with everything else going on in your business. These five things should be on the report that is delivered to you weekly.