“I hired a bookkeeper. Now I don’t have to worry about the books anymore.”
Theft often happens when you stop paying attention to the financial part of your company. You can delegate responsibility for the day-to-day bookkeeping activities. You must retain oversight and review every week and every month. It’s your business. You have to oversee all of it, including financials.
Your financial Statements are your scorecard. You have to know what they are telling you.
By the 15th of each month you should receive a profit and loss (P&L) statement and a balance sheet.
Along with the financial statements should be an aged accounts receivable and accounts payable report. If the aged receivables don’t match the receivables amount on your balance sheet or the aged payables don’t match the accounts payable amount on your balance sheet something is VERY wrong!
Invest less than a minute to answer these 10 questions.
- Are financials reported on an accrual basis rather than a cash basis? (They should be) Accrual accounting is critical for good financial analysis and spotting minor issues before they become major crises.
- Does your balance sheet balance? (It should) Assets should balance liabilities plus net worth (or equity)
- Do you have negative cash on your balance sheet? (Should not)
- Is your inventory (if you have it) the same number every month or is it not on the balance sheet? (It should be on your balance sheet and NOT the same number every month)
- Do you have negative payroll taxes on your balance sheet? (In most cases you should not)
- Do you have negative loan balances on your balance sheet? (You should not)
- Do you have a negative gross profit on your Profit and Loss statement? (In most cases you should not)
- Do you have no rent expense (or utility expense or any expenses that you know you pay every month)? (You should)
- Is your year-to-date net profit on your profit and loss statement the same as your current retained earnings on your balance sheet? (It should be)
- Do your aged accounts receivable and aged accounts payable balance reports match the values shown on your balance sheet? (They should)
Fix the mistakes if they appear on your financial statements. Garbage in equals garbage out. You can’t make good business decisions with inaccurate financial data.
New Class!
Financial Statement Trend Analysis is a one-day class held in my office. Discover what your financial statement trends mean and what to do if they are not headed in the right direction. This class was approved by the National Association of State Boards of Accountancy (NASBA) and awards 6 CPE credits to CPA’s upon satisfactory completion of the day. Even if you are not a CPA you can take this class…and use it to increase your profitability and build wealth.
Class Date – Class is held in my office in Duluth, GA: December 3, 2024
Want a free review of your financial statement?
Every business, large and small, can benefit from taking a closer look at its numbers. We’re happy to do a quick review – showing you what appears to be good and some areas you might want to pay attention to. (This is where Financially Fit Business can help too). And, pass along this offer to your business friends and colleagues who could benefit from this review too!