Five secrets hidden in your financial statement
Your boring financial statements have five hidden secrets that will help you better manage your cash flow and interpret the necessary numbers to make profitable decisions.
Secret one: Flash reports are more valuable than financial statements
Financial Statements by the time they are prepared, reviewed, and blessed; are already out of date. Business people read their financial statements and look for trends and anomalies to make business decisions. It would be better to make business decisions based on real-life data; this data usually comes from a “flash report.” A flash report has daily or at the most weekly reports. The flash report contains the key metrics you need to know to understand what is going on with your business today to make decisions about tomorrow. The flash report metrics are always compared to the prior amounts to do a benchmark.
Secret two: Cash is not what it seems
The amount you see on your cash balance is not always the actual amount of cash in your bank. This is because some payments are already in, and some payments are still in process.
Secret three: Your real business is in your general ledger
The general ledger can be seen as the “diary” of your business. Every transaction is recorded here, so you will see every single transaction that impacts your company’s cash flow. Your financial statements are a summary of the information that is in your general ledger.
Secret four: Projects are more valuable than financial statements
Your financial statements give you insights into the past, but projects help you look into the future. Read your statements to understand your business better, but always keep on working on regular forecasts.
Secret five: You don’t need an audit, but you should get a review
Having a CPA to look at your numbers is having the advantage of having someone with a financial background digging into your numbers, comparing you to other companies in your industry, and pointing out note items. A good CPA will offer you advice, recommendations, and counsel based on what they see.
Did you know these five secrets hidden in your financial statement? Call us now or schedule a strategy session with us. Just click here. We can discuss how we can help you run your business without worrying about the underlying legal consequences. Learn more about Focus Law.