Resolution #3: Reports, Reports, Reports

When I worked in banking, we used to joke about reports. We had a report for everything. I believe we may have even had a report to keep track of our reports. It drove me crazy.

Reports, however, are an important part of understanding your business's financial health.

So, resolution #3: Start looking at your business's reports.

Which ones? Most accounting software will give you a decent amount of reports, and based on your business operations; some may be more important than others. But here are some heavy hitters

Profit and Loss:

I have not met a business owner who doesn't want to see this on a regular basis. This report tells you, are you profitable? How much money are you making? And, how much is that costing you? However, within the profit and loss arena, there are some other reports that may be worth looking at:

• Profit and Loss by Customer: If you track expenses or the cost of goods sold to specific clients or customers, this report will allow you to evaluate that relationship. Are you charging enough?

• Profit and Loss: Prev Year Comparison: How is business as it compares to last year? Is revenue way up? This may warrant a call to the CPA to see if additional tax planning should be done. A large decline may result in a need to evaluate current practices.

Balance Sheet

This equally important report is frequently ignored by small business owners, but in some ways, it is a more significant gauge of your business's health. The balance sheet reports all company assets, liabilities, and capital. The money you have in your business checking account, the balance on your business line of credit, the amount that customers owe you, and the amounts you owe others will show up here. For more details, you can read this great article

This information builds to give you the equity of your business.

When you look at yours, if you don't know the story it is telling you, then have a professional review it with you.

Statement of Cash Flows

This report is frequently, with the Profit and Loss and Balance Sheet, considered to be the third part of the business reports trifecta. Information from the Profit and Loss and the Balance Sheet feed into this report. Focus on the bottom lines. You want your cash to be positive, at the beginning and at the end of the period. If you start to see negative cash flow; then you could be on a troublesome path.

Accounts Payable/Accounts Receivable

Accounts Payable is the report of who you owe, how much, and when. Look at it to understand what monies you will need to send out over the next 10 or 30 days.

Accounts Receivable is the report of who owes you, how much, and when. This assists with collecting on past due invoices and projecting when cash will be coming into the business.

Take time each month to review your financial reports... even if they continue to "not surprise you." A review of the reports can help ensure no errors are made, help you make decisions to grow or even to scale back. And, that one time it does surprise you, you can determine if it is a blip or a financial situation that needs to be addressed.