There are four critical questions you need to answer:
- Are you regularly receiving the three reports that are key to understanding how your business is doing?
- Balance Sheet
- Income Statement
- Statement of Cash Flows
- Do you understand what all of these reports are telling you?
- Do you have confidence in the accuracy of these reports?
- Are you getting the detail that you need to make decisions?
Many business owners look at few critical numbers on their financial reports. They look at Sales, Gross Margin and Net Income. They consider these the all-important numbers. But what is important is whether you are getting enough information in your reports to make changes in your business today that will make your company more profitable tomorrow?
Everything that happens in a business flows down to the financials. By properly analyzing the financial information that your company’s accounting system provides, a skilled CFO can walk back through the financials to identify important information about the company’s operations, and provide answers to the company’s critical operational questions. Sometimes the issues are regarding inventory, production efficiency, setup times, scrap, quality control, shipping and receiving or more. No matter what they are, proper analysis of the variances, the Key Performance Indicators (KPIs), will shed light on where greater efficiencies can be found. And, greater efficiency and the resolution of problems brings money to the bottom line.
In addition, proper review and management of your company’s Cash Flow will avoid future problems by assuring that there’s enough money for payroll, to pay that critical vendor, to cover the owner’s tax liabilities, or to make that balloon payment when the term loan comes due. Financial Reporting puts the operational results of your company on paper. Those numbers provide guidance to the changes you should make to improve your company’s profitability.
CFO Simplified will take those complex reports and bring clarity to the numbers so that you can manage your company with greater confidence and knowledge, enabling you to make the critical decisions that need to be made every day.