Financial Management Of Your Small Business
There are Five key financial reports you really do need to master. These financial reports are;
- Profit and Loss Report
- The Balance Sheet.
- Aged Receivables and Payables
- Cash Summary and Forecasting
- Management Reports
Now to be clear, we are not suggesting you need to be able to produce these reports. That is the responsibility of your Bookkeeper or Accountant. Yet, you do need to make sure they are updating and producing these reports for you preferably at the end of every month. This Small Business Financial management course will help you achieve this.
Take a look at these short videos produced by Xero, where it explains how the ‘Profit and Loss Reports’, ‘Cashflow Statements’ and ‘Balance Sheet’ are presented in Xero. It is prudent to highlight here that the online accounting software, in this case, ‘Xero’, is set up so that these reports are a lot easier to produce for your Accountant advisor.
Plus because it online everyone can have access to it 24/7 365 days of the year. As long as your bookkeeper or Accountant has been updating the Xero software every week, this will give you access to real and accurate data to make better decisions.
Business Management Reports
Learning and applying the proper and correct skill and discipline through this Small Business Financial management course is one of the key success factors in business today. Yet I am amazed how the majority of Small Business Owners cannot read and fully understand a’Profit and Loss Reports’, ‘Cashflow Statements’ and ‘Balance Sheet’, let alone interpret what strategies to undertake to improve anything in these reports.
If you too are one of these Small Business Owners who is uncomfortable reading any of the ‘Profit and Loss Reports’, ‘Cashflow Statements’ and ‘Balance Sheet’ because you don’t really understand them, well you can feel a little more comfortable because you are in the majority, but don’t rest easy, because we need to help you to develop the skill and discipline to regularly conduct the proper and correct skills through this Small Business Financial management course.
Key Reports For Effective Financial Management
There are a number of key financial management reports we as Small Business Owners need to be able to read, understand and interpret to take further affirmative action to improve results even more. Mr. Warren Buffet says it well above, “Accounting is the language of business, if you can’t speak the language, it’s difficult to win the game!”
Now even though Mr. Buffet is really referring to Financial Accounting, we at LibAbun, prefer to extend his quote from “Accounting” to “Numerical Mastery” because there are Marketing numbers, Sales number and so much more data available to you to interpret.
Importantly, your Financial Numbers are really ‘Result Indicators’ or ‘Key Result Indicators’, both are a history lesson and only tell you what has happened. You cannot change that result as the time to act has passed. More importantly, is your Marketing, Sales, and Operational ‘non-financial numbers’. These are usually ‘Performance Indicators’ or ‘Key Performance Indicators’ and these when monitored daily or weekly, never longer, will ‘Indicate’ to you and your team, what you need to do to improve that performance now! Your business is always offering you ‘data in the form of numbers’ to help you conduct the ‘4-R’s of Business – Recording, Reporting, Reviewing and Re-adjusting.
Now you may be thinking “My Accountant does all that for me!” ‘Yes’ we want your Accountant, or at least your Bookkeeper to enter all the Financial data to produce your Financial reports, they are the experts to do that. Yet, it is still your ultimate responsibility to conduct the correct and proper financial management of your Small Business. The ‘Taxman’ or any other people you may owe money too are not coming knocking on your Accountant’s door if they become overdue. Nor is your Accountant going knocking on the doors of your customers who owe you money. It’s your responsibility to learn how to conduct the correct and proper financial management of your Small Business. So the ‘Buck stops with you’ – excuse the pun.
Online Accounting Software Such As Xero.
These days the smartest way to conduct your financial management of your Small Business is through the use of an ‘Online Accounting Software’, such as Xero. Not only is it a ‘Smart’ way to conduct business due to the automation and online enhancements in productivity, but many national governments are requiring businesses to go online too. For example, in the UK, the HMRC, is requiring all VAT(Value Added Tax) registered businesses to be using an online accounting software to send in their VAT(Sales Tax) reports. It is expected that every other business will be required to do the same, sometime soon after. This is part of the British Governments ‘Making Tax Digital’ scheme.
That aside, regardless as to whether it is a Government requirement in your country, it is still ‘best practice’ and the smartest way to financial management of your Small Business.