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I couldn't help but add a quick blog entry after being absolutely surprised... or should that be shocked and disturbed, by a weekly small business ideas newsletter just received titled "How to Create Money..."
The full newsletter can be seen here.1
To sum up a few key points from this newsletter:
"Anybody can issue an invoice. There is almost no formality...
...write out an invoice on a scrap of paper ... and instantly your asset column increases...
...since clients have no value, accounting-wise, your venture is doing a little better than it did a few minutes ago."
Do you think this method is "Government approved" as stated here?
And do you think "it does not matter if there is no real reason for the invoice"?
Maybe I've misunderstood the point of this newsletter I've received, but if I have just how many out there may have actually taken this as advice to raise invoices for no real reason to make a Balance Sheet look better?
Is advice like this how things like the Enron Scandal were born?
Do people not realise the harm caused when the same "lost secret" is remembered and leads to the Satyam Invoicing Scam?
What else can I say?
Harry Nicholson
H Nicholsons Accountants
You are welcome to republish this article providing you include the following text and link at the end of the article:
Harry Nicholson, H Nicholson Accountants - A fictitious sample member of The Accountants Circle.
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PetesWeekly
Small Business Ideas |
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How to Create Money...
We all complain about how banks willy-nilly create money. But I would like to share with you a lost secret: How you can create money.
My method is government approved, so much so that when you use it they instantly think you owe them 14% of this money that you created.
It is the only way a business creates money. You might even have done it before. It's called an invoice.
Now here's the thing: Anybody can issue an invoice. There is almost no formality.
The state is so convinced that this method works, that once that piece of paper has been issued, you owe them a 14% transaction fee. (European governments are even more convinced, so much so that they will charge you 25% for the privilege of writing an invoice.)
When it comes to cancelling an invoice, there is a lot more formality because the government hates you to give away their money.
As far as the government is concerned, and your accountant is concerned, are your staff really the asset that we are often told they are? Not according to your balance sheet. In fact, your staff are hidden away in your income statement, and not even under income! They are your biggest expense. As your accountant will tell you, a good business keeps expenses as low as possible. (I like mine to be under 5 feet.)
What about your client list? That doesn't appear on the balance sheet either.
But, write out an invoice on a scrap of paper for R1140, and instantly your asset column increases by R1000. Instantly you owe Jacob's team R140.
It does not matter if there is no real reason for the invoice! For instance, if I issue an invoice charging you a penalty for your outstanding balance (even if we don't have an agreement that you should pay) then my business is better off. At least on paper.
And since clients have no value, accounting-wise, your venture is doing a little better than it did a few minutes ago. (Your about-to-be-ex-client might not agree.)
An invoice shows that the baton has passed. You've done your bit, and now the recipient must do his. In other words, this little document really punches way above its weight.
When last did you look at your invoice? Does it clearly tell your client how to pay you, and on what exact date? Does it thank your client for her custom? Is it accompanied by a catalogue of your other services? Does it contain a coupon, or a promise of discount on the next purchase? Does it inspire the recipient to pay early to get a 5% rebate? Or is it a little like mine, in need of an extreme makeover?
Bottom Line: Stop reading and go create some money. You want to, your family wants you to, and the 2.37 poor people depending on your tax payment really want you to.
All the best
Peter Carruthers
May 7, 2009
PS Congratulations on surviving April!
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