Today I am on the road blogging and being a wife, mom and enterprising woman, I always strive to maximize my time. So, yes, I think about my enterprise (and you, my magnificent readers) quite a bit. This is one of those filler moments in between client appointments and picking up my daughter from school. So I am grateful for the quiet time that I get to take in the beauty of God’s creation (and what a beautiful day it is!). I also get to share some of my thoughts on getting the most from financial reports with you.
The reason that I am highlighting this today is because I realize that a lot of you are using accounting software to produce Balance Sheets and Income Statements for your business. Many of my readers do not have a financial background and may not be working with an accountant so I want to share what to do after getting the data from bank, credit card, and loan statements. Once you record it in your accounting system the next step is to prepare financial reports. Here’s why:
- You should be reviewing the financial statements to make sure the data is accounted for in the correct places. Instead of having reports that stare you in the face, I actually want you to do something with them. Using the reports in front of you, take out a pen to circle any line items that stand out.
- Look for amounts that look unusual so that you can investigate them. I like to make notes with a red pen but you can use any color you like. Using a pen instead of pencil helps to draw attention to results that appear abnormal from one period to the next. If it stands out, circle it.
- Finally, go back for a review. Take time to ask yourself what happened during the period that caused the numbers to change. This is how you get the story behind the numbers. It is also how you learn what policies, procedures, or strategies are working and what you should revise.
Financial reports are excellent tools that aids in deciding what to do in business. That is why you need to understand what you are looking at. If you don’t understand how to use financial reports consider consulting with an accountant who can explain the numbers to you. You can also try a community college or enroll in courses online to get familiar with accounting terms and financial reports.
And if you’d like to learn more about how to use financials to grow your business join me on Facebook for helpful financial tips and announcements on my upcoming course.
Are you using financials reports on a regular basis?
Let me know how this practice helps you by sharing your thoughts in the comments below.