Short Talk About Finance

Although my background was not in finance (or in business), company invoices were much like the bills I paid at home: I knew we paid rent, util­ities, insurance, and salaries. I also knew that we paid for the products we produced and their marketing. Then, there were many other items like the outside professionals, computers, and miscellaneous items like office supplies.

Short Talk About Finance

Short Talk About Finance

Although my background was not in finance (or in business), company invoices were much like the bills I paid at home: I knew we paid rent, util­ities, insurance, and salaries. I also knew that we paid for the products we produced and their marketing. Then, there were many other items like the outside professionals, computers, and miscellaneous items like office supplies.

Over several weeks, we sorted these invoices from the just-ended fiscal year into categories that seemed to make sense and covered all the types of invoices we found. In questioning people about what each individual invoice pertained to, we found—to our amazement—that many bills had been paid for services we no longer received. This was particularly true for maintenance contracts on equipment we no longer owned. Once the accounting department had been told to expect a particular bill each month, they continued to pay it without question. Many bills are ad­dressed to accounts payable, and paid without anyone else ever seeing them. We cut about $77,000 in expenses simply by questioning old in­voices. That was the first step to taking control of the business and to the development of the worksheets in .