Financial Statements
Most successful business managers use financial statements and other special reports to generate higher profits. If you haven’t been using all the financial tools available to you, here are some ideas to get you started.
There is no need to feel intimidated by financial statements. If your company’s record system is properly designed, you should be getting regular financial reports that are easy to understand. In addition to the traditional balance sheet and income statement, you should get special reports and ratios specific to your industry. You will be able to use this past performance information to help you create higher profits for your company.
Accurate financial reports compared with industry standards and with your company’s past performance will also serve as an early warning system of problems or opportunities which need your attention.
How do you get the best financial information at the least cost? To begin with, there are three basic levels of financial statements: compiled statements, reviewed statements, and audited statements. The type of report you need may be specified by your banker or by an absentee owner. An owner who lives out of the area may require a higher level of report than one who works closely with the business.
- Compiled statements Compiled statements are management’s information put in the form of financial statements. The accountant is making no assurances as to the accuracy of the information in those statements. Because of the limited involvement by the accountant, this is the least expensive level of statements.
- Reviewed statements Reviewed statements require more involvement by the accountant than is required for compilations, but less than is required for audited financial statements. The accountant needs to obtain a general understanding of the business’s organization. There will be little or no verification of specific figures on the financial statements. Reviewed statements are often required by lenders and owners who do not require a full audit.
- Audited statements Audited statements are the highest level of financial statements. Accountants must spend whatever time is necessary to allow them to express an opinion as to the accuracy of the numbers on those statements. Because of the time involved, audited statements are the most expensive financial statements. Unless an audit is required by outsiders, reviewed or compiled statements should do nicely for your company.
In addition to the traditional financial statements, you will want industry specific reports to allow you to compare your company’s performance to that of others. You will also want to learn the key ratios and the value of those ratios in month-to-month and year-to-year comparisons of your company’s performance. Ratios and reports: Beyond the financial statements
Cash flow is important as well. One of the most perplexing concepts can be understanding cash flow. This is because cash flow is not profits, nor does operating losses necessarily mean poor cash flow. Here are the three elements to properly manage cash flow
The whole point of bookkeeping is to find out where your business stands financially! These are key reports to help you save time and money and make your business more profitable.
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Every business needs an accounting system to keep their books. Examples include QuickBooks Online, QuickBooks Desktop, QuickBooks Enterprise, NetSuite, Sage, and Xero. You may have an accounting system that is industry-specific. The most important question is whether you have the best accounting software solution for your business.
We can help you with many aspects of your bookkeeping system: training to improve your efficiency, accounting software selection, setup of new systems, improved customization so you can get better information, migration to a new system, and streamlined workflow design.
If your accounting software meets your basic needs, but you need additional functionality, we can often solve that with an add-on accounting app. There are now hundreds of add-on applications for your accounting system that can improve a multitude of things: inventory, invoicing, time-tracking, bill pay, reporting, and so much more. We have excellent knowledge of the ecosystem of accounting systems and applications so that we can help you become more productive.
Do not hesitate to ask for assistance to leverage your financial information to enhance the profitability of your business. Contact us.
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