Premier Tax & Accounting Services’ own Jennifer Richardson spoke to the Blue Ridge Chamber of Commerce last quarter on the topic “The Right Data at the Right Time.”
Understanding what data to look at and how to interpret it is critical to the success of your business. In this article, we’ll summarize just a few of the points Jennifer spoke on.
Sometimes trying to analyze financial reports can be overwhelming. Looking at financials can be kind of like looking at the dashboard of a vehicle. There might be too many gauges and indicators. The information that you need is there, but you don’t know where to look for it. Or maybe, other information is distracting you from what you really need to see.
For many small businesses, looking at their financials is like looking this dashboard. Maybe as an owner, you say to yourself, “I don’t know where to start.”
Well, a good starting point is daily reporting, looking at your cash balance or cash position reports. Cash is king, as the saying goes, and you need to always know where your company stands cash-wise. It’s important that whichever of these reports you use be simple, without too much information. And you need to review it every single day.
Next are the weekly reports. We recommend you examine a cash flow forecast and a sales and productivity report. Now, we’re looking more into the future to help understand how your next week is going to go. Do you need to pivot due to financial obligations, like moving money to run payroll? Do you need prompt some customer payments to improve your cash position?
Finally, we move to monthly reports. These are your “standard” financial reports – Profit and Loss, Balance Sheet, and Statement of Cash Flows. But beware of pouring over these every single day. That is generally not something we recommend. And keep in mind that figures can fluctuate from month to month, so it’s important to look at the P&L not only monthly but also on a rolling 12-month time frame to see averages and trends.
Putting together a system of reporting can be overwhelming and time consuming if you’ve never done it. But we’re here to help. Contact us today if you have questions or would like for us to create a reporting plan for your business. Call us at 706-632-7850 or email us at help@sbsaccountants.com.