The last thing most people and small business owners want to do is to sit down and plow through their financial statements. However, sitting with your CPA or accounting professional and regularly tending to this matter may, in both the short and long run, just end up saving your business from certain catastrophe.
- Financial statements, basically, are formalized and comprehensive reports showing exactly how your company is currently doing financially. It consists of three parts: your income statement, your balance sheet and your cash flow statement. You can put all of this together yourself but you likely don’t have the time or the financial experience to do so. That is why the most successful small companies have a CPA or accounting professional as part of their team.
- The more profitable small businesses, and certainly the titans of world business, use financial statements as a source of intelligence that can serve them in many ways. By reading, and understanding, their total financial picture, companies are, then, able to budget and forecast accurately, manage their employees, their cash and their inventory more effectively, and be able to have a better handle on their pricing and their profit margins.
- In addition to critical strategic planning, your financial statements will be a huge help to your CPA, accounting professional or tax accountant as you prepare to file your tax returns. Also, financial statements are the first thing lenders or investors want to look at. Potential clients, especially the potentially big ones, may want to glance at them to determine if it will be in their long term interest to do business with you. So, if you want to do more than survive, if you want to thrive, then you need to get with your CPA and accountant and truly begin to understand the importance your financial statements will have on your future.