How do you know if you’re getting the monthly financials you need to make good decisions for your growing business?
Many business owners believe they have adequate visibility into their business’s financial health. But what exactly are “good” monthly financials? It can be easy to mistake a lot of data for a detailed picture, but if your data is not properly aligned, you’re seeing a distorted version.
Reliable, up-to-date numbers are a window into your company’s financial strengths and weaknesses.
The Big Picture for Better Decision-Making
The right monthly financials provide insights you can use to improve cash flow management and data you can use to draw comparisons between time periods and track KPIs. They establish a foundation for forecasting and a historical context for identifying and understanding trends. The result is better and more agile decision-making, which you can use to steer around obstacles and take advantage of opportunities with confidence.
When you forgo monthly financials or rely on financials that do not properly accrue revenues and expenses, it is easy to be misled into poor decision-making by a false sense of profitability.
This sort of distortion gets compounded month after month, and eventually you may find that you have mistaken a poor year for a good one or overlooked a shrinking line of business because the losses were obscured by overall growth.
Unless your business is a straightforward product-out/revenue-in model, transactions don’t line up to create a real-time picture of your business’s health. It’s up to you or your accounting partner to align them. Otherwise, the list of things you may be missing is profound.
What You Don’t See When You Rely on Inadequate Monthly Financials
The lack of reliable monthly financials can put your business at risk in many ways. Here are a few areas where out-of-sync numbers can distort your view:
- You’re not making as much money as you thought
- You’re making money, but not in the areas you think you are
- You’re overlooking an opportunity to invest more in a promising line of business
- You think you know where you should be focusing your efforts, but you can’t say for sure if the numbers support your instincts
- Segments of your business are lagging
- You’re missing capital investment opportunities
- Booked revenues from work you did last year are disguising the true state of your business’s health
- Your productivity or sales have fallen off, but it’s hidden behind price increases
- You’ve got unprofitable lines of business concealed by cash received for future projects
- You’re overlooking early warning signs of a problem that could be turned around if addressed in time
- You can’t discern which growth opportunities are worth pursuing and which should be rejected
Find an Accounting Partner Who Will Provide the Financial Insights You Need
Monthly financials that accurately accrue revenue and expenses are a tremendous source of insight for business owners. Relying on basic monthly statements and monthly close processes is like gauging your financial health by looking only at last month’s bank statement.
Don’t let issues go overlooked with financial statements that only show you part of what you need to see. A team of experienced accounting and business advisory experts can help you gain access to the reporting you need to steer your business. From accounting outsourcing, financial management, and business advisory services to fractional CFO outsourcing and tax planning, preparation, advisory, and consulting services, a holistic CPA firm can ensure you have the full picture of your business health.