It’s essential for a business to have up-to-date financial statements in order to remain healthy and grow. Because if you received your financial information much later than the relevant period, the chances are that it won’t have much value.
So for example, if you had not received your year-end 2014 statements until June of the following year, that’s an entire 6 months of progress and money that is probably lost by not at least having quarterly – if not monthly – reviews.
And in fact, with assistance from your accountant, you can even have daily financial statements that are more accurate than what you’d receive from a bookkeeper. Because you are the one who knows why that check was written; you don’t have to assume anything.
Budgets are also vital for any small business, because not having one is almost like trying to cook a meal without a recipe.
If you don’t know specifically what you’re looking to accomplish with your business finances – or have a plan for it – then what you’re likely to end up with is a mess.
Therefore, you should have expectations for your income and expenses, and compare them each month to what has actually taken place. This allows you to make the proper adjustments, stay on track, and meet your goals.
Bank reconciliations are something that I find many small businesses need to pay more attention to. There are plenty of business owners I’ve worked with who are rarely aware of their bank balance.
However, I’ve found that making sure these reconciliations are handled properly can be the difference between detecting theft in a business – which is more common than one might think – or allowing other losses to occur that can easily be accounted for.
You should review your checks regularly – making sure that you remember writing them and what they were for – and also make sure that you have the proper separation of duties between signing checks, making payments, and recording the transaction in your system.
Product & Service Performance
Your system should include reports that allow you to see what products or services are selling, how much, and any relevant trends that are taking place.
For example, if you’re average price per product changes, then why?
Customer Sales Information
Although it’s easy to know which customers are buying from you and who you have lost in the beginning, it becomes more difficult to keep up with as you continue to grow.
Therefore, having a report that you can print out to show your customers and track the relationship can be very valuable.
And especially when it comes to your top customers, you’ll want to identify opportunities to increase those values over time. Because in one way or another, it’s true when they say that 80 percent of your profits are likely to come from the top 20 percent. So who is in your top 20?
Accounts Receivable Report
Every business owner should know a sale is not a sale until the cash is in the account. And not only that, but it’s well known that the longer it takes you to collect that cash, the more likely your chances are to never receive it at all.
So with that said, every business needs to be able to track accounts receivable – with an AR aging report – and a full process that speeds up those collections.
Accounts Payable Data
It’s necessary to have an efficient system for making and tracking payments, in order to maintain a good budget. And not to mention, in order to have good relationship with your vendors, and avoid penalties for late payments.
Payroll can be a pain if not handled correctly, because there can be a lot of legalities to watch out for. So in order to not get frustrated and waste too much time, there must be a dependable system for processing payroll in place.