Financial Statements and Success in Business

Financial statementsThere seems to be no shortage of articles, blogs, books and consultants who have great ideas about how to succeed in business. Why is it that out of all of these resources that want to help me succeed, few include an understanding of financial statements and the role they can play in business success as part of their success formula?

It seems that the business community is focused on leadership, passion and any number of other “secrets” to success, but unless you are reading a financial publication, rarely is there any mention of the importance of understandable, actionable financial statements and the role they can play in business success.

Why is this? Well, there could be a number of reasons, including:

  • Being too embarrassed to admit that we do not understand financial statements – even though that is the norm.

  • There is a lot of math involved…again, embarrassment?

  • Finance is boring? It IS difficult to write about accounting in an interesting way. Although, I know one person who does write and speak about finance in an entertaining and interesting way – Steve LeFever, Chairman of Profit Mastery, a Seattle, WA financial education firm and a partner in the Electronic Financial Officer service.

There are more reasons, but you get the point.

So, as it turns out, most small entrepreneurs delegate responsibility for their financial statements to their bookkeepers and other financial professionals. I speak from personal experience because as a small business owner, this was how I operated. When I did meet with my accountant, I felt that if I had a net profit and money in the bank, I was doing OK. We entertained little or no discussion about things like our balance sheet or income statement ratios and what they might mean.

I had little appreciation for the costs associated with an additional day of inventory, did not understand the costs associated with letting accounts receivable “slide” a little. I shudder to think of how much money was left on the table due to my lax financial practices.

The reality is that understanding just the “big Three” (payables, receivables and inventory) can free up a surprising amount of cash (working capital) and can be the difference between making payroll or being forced to take out a line of credit to make payroll.

At FinancialSoft, we are passionate about helping entrepreneurs succeed which is why we built a system (with our Profit Mastery partners) that gives businesses financial intelligence that is understandable and actionable. Our service is called “Electronic Financial Officer.” With the Electronic Financial Officer service, you can now look forward to understanding your financial reports. You can be comfortable talking with your employees and financial professionals about what is driving the numbers in your business.

The best part is, getting your reports is as easy as clicking your mouse. When your books have been closed for the month, simply open your account on our web site, check your goals and click the “Get your report” button. Electronic Financial Officer translates your QuickBooks statements into easily understood, actionable charts and tables that help you identify and prioritize the most important opportunities for profit improvement in your business.

Let’s review: You can get actionable, understandable financial statements every month with no additional work or staff time involved. What’s not to like? You’ll be on your way to understanding where to go and what to do to make your business successful and profitable.

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