If you are not a numbers person or are short on time, you may find it a total drag to keep up to date with your finances.
That’s why outsourcing is a lifesaver for many business owners. Having someone else take care of the time-consuming day to day stuff means you can focus on other things.
But it doesn’t mean you can forego your financial reviews altogether!
Even if you have a bookkeeper or accountant, you should slot in time every month to take care of some essential financial checks.
Let’s look at the most important things to review each month…
Monthly Financial Reviews You Should Do In Your Business
Why Monthly Financial Reviews Are So Important
Would you be comfortable driving your car around without a fuel gauge? Didn’t think so! Trying to run a business without keeping tabs on what’s fuelling it is the equivalent. Sure, you might roughly know how much is left in the tank, but one day, you might find yourself stranded in the middle of nowhere. Of course, if you have fantastic people taking care of the day to day books, you have got a little more leeway. But as a business owner, you still need to know the basics so you can make informed decisions about maintaining – and growing – your business.
Review Your Key Financial Reports
The best way to get an overview of your finances each month is to look at the three main financial reports. You can generate these through your online accounting system or request them from your bookkeeper.
Balance Sheet The balance sheet keeps track of the value of things owned by your business (including your cash assets). At a glance, you can see if the business overall has gained or lost value.
Profit and Loss Report Through your P&L Report, you will be able to see how much money was earned vs how much was spent, telling you if you had a profitable month or operated at a loss. This can help inform decisions about whether you need to increase revenue or decrease costs
Cashflow Statement Your cash flow statement tracks how much actual cash the business earned (it doesn’t include projected income such as unpaid invoices etc.) This is essential to understand how much money you actually have in the bank at a given time.
Check Unpaid Bills And Invoices
If everything is running smoothly, all your bills should be paid on time. If they are not, you need to identify why and resolve the situation quickly to keep your suppliers happy. Late and unpaid invoices are a cashflow issue, and the presence of these every month indicates you may need to change the way you handle your invoices or collect your debts.
Keeping your employees’ happy starts by paying them fairly and on time! Have a quick scan of your payroll every month to make sure it aligns with your budget, and everything is running smoothly.
Assess Your Tax Situation
Even if it’s not coming up to the end of year tax time, you need to take taxes into consideration during your monthly financial reviews. Are expenses being recorded appropriately to ensure things run without a hitch at tax time? Are your bookkeeper and accountant on top of all your tax requirements? Do you have money set aside to pay tax at the end of the year? Staying on top of this prevents a panic at tax time, and can save you dollars on accountant fees, too! Set aside time every month to review your key financial reports, touch base with your bookkeeper and accountant, and ensure you are on track to meet your goals. These monthly financial reviews allow you to understand your business better, make sure you stay out of trouble and make smart decisions. If you need support to get your finances sorted, our fantastic, experienced team at Admin Army are ready and waiting to make your life easier. Get in touch with us today!
Would you like to know more about outsourcing your bookkeeping?