The Big Difference Between Cash vs IOU

Selling your products or services is such a great feeling. Seeing the email about another sale or hearing your phone go "cha-ching"! 

When you sell high-end services or products, we often offer our customers a payment plan—this where it can get tricky.

Knowing what is revenue when it comes to payment plans and what are IOU's is key.

Cash vs IOU

There is a concept of cash vs. paper money, or IOU, when it comes to revenue and payment plans. Here's why you need to know the difference between actual cash versus an IOU. 

This post came from a reader (who has some accounting knowledge) and asked me to talk about this subject.

See, she had clients boasting about how much revenue they earned one month while also stating the money was coming in from payment plans.

Money "earned" from payment plans is what you would consider an IOU. It is not revenue that can be claimed as income at the time of sale for most entrepreneurs.

WHY?

Because there are two types of accounting:...

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