Nothing beats fall – changing leaves, pumpkin spice, cooler temperatures, and my favorite: FOOTBALL SEASON! Growing up in SEC territory, nothing beats college football; it’s a second religion and a way of life. If you are anything like me, one of the first things you want to see when you flip to the game is the scoreboard, and for good reason – you want to know how your team is doing.
There’s a reason the scoreboard is consistently shown during the game to both the fans and the players. It details the where they stand (score), the time remaining, and their current position (1st and 10). But what if during the game, the scoreboard showed stats from last week’s game? Or what if it detailed information from the first down of the game and now it’s the fourth quarter? This would present serious issues if the teams and their coaches acted on that information.
Your financial reports are your business’ scoreboard. You need to have accurate, timely information to make the best play.
The Final Score
The Profit and Loss Statement (P&L) is your financial scorecard. It details what you made (your score), what you spent (your opponent’s score), and how much was left over (how much you won by). It’s the report most business owners know and look at for good reason, but it only tells part of the story. It nets you the “W” at the end of the game, but some other tools are more useful for affecting the outcome mid-game or in preparation for next month’s game.
Current Position – 1st & 10, or 3rd & Long?
Knowing where you stand during your team’s possession is crucial. Is it 1st down, is it 3rd & long, or 4th and inches? Typically a coach would make different plays based on that information, and that’s what your Balance Sheet is for your business. It is a snapshot of all of your accounts at that particular time. It shows the exact amount of money in each of your accounts, how much money is owed to you, how much you owe to others, and how much inventory and assets are on hand. Having this information on hand allows you to course correct, keep your business more liquid (more cash on hand), and get the win.
Instant Replay and Game Film – How You Got Here
The hidden gem of both football and finances. There is a reason they show it after a questionable call (“Indisputable video evidence” anyone?) and why players review it constantly between games. The Statement of Cash Flows is the “Instant Replay” of the finance world. It details exactly where your money went. This report is often not provided by most accountants, but failing to review this report causes you to miss the complete picture.
Bringing It All Together
It’s crucial that you review all three reports (and in a timely manner) in order to have a complete financial picture of how your business is doing. A savvy business owner uses all the tools and resources at his disposal to increase sales, so make sure you’re not missing out on the resources to increase the health of your business!
Are you not receiving these reports currently or not in a timely manner? Are you tired of doing it yourself or don’t know how to interpret your financials? Then let’s chat! Click the link below to schedule a time to learn about how we can help.