5 Key Reports to Give You Control of Your Business Financials

Most entrepreneurs and leaders find themselves with irregular or nonexistent financial visibility. Without a good handle on your financial results and the resources you have available, it can be difficult to make decisions quickly and seize opportunities as they arise. Decisions and opportunities like… Can I afford to hire another employee? Can I generate enough additional revenue to justify this new production equipment? Should I keep this in-house, or consider outsourcing it? The kind of decisions and opportunities entrepreneurs and leaders face every day.

Whether you’ve been ignoring your financials because they’re too far behind to be relevant, too boring to hold your attention, or too overwhelming to understand, the growth of your company will eventually be limited without consistent financial visibility. You’ll miss opportunities, make decisions too slowly, or rely too heavily on your gut.

Decision-Making Freedom

Knowing your financial numbers leads to confident decision-making and the freedom to pursue more opportunities. You can get a handle on your finances by reviewing a few key financial reports in a consistent rhythm throughout the year.

• Annually – Create a Budget to project your monthly revenues and expenses for the year. Align your budget to your strategic plan – think about your goals, where you want to go, and how you plan to get there.
• Monthly – Review the following reports each month:
  1. Profit & Loss (P&L) – Track your actual results against your budget and compared to the prior year. Comparing to your budget provides insight on your strategies and plans while comparison to the prior year offers context.
  2. Balance Sheet – Understand your financial position – your assets, liabilities, and equity at the end of each month. This can reveal opportunities to invest excess resources, or alert you to risks of limited capital.
  3. Forecast – Forecast where your P&L will end up based on actual results and any new or updated assumptions you have. You don’t need to change your original budget; use the forecast as an additional planning tool.
• Weekly – Maintain a rolling weekly Cash Flow Projection to estimate cash receipts and disbursements and a projected weekly cash balance. We recommend projecting a rolling 12-week period, so you have visibility into potential problems or opportunities on the horizon.

“Knowing is not the same as doing.”

There is a famous quote from the Greek philosopher Socrates that reads: “Knowing is not the same as doing.” So, let’s get started with the doing part. First, determine who should be involved in preparing and reviewing the financial reports listed above (i.e. yourself, outsourced CFO, internal bookkeeper, etc.). Then, schedule time on your calendar each week for your cash flow projection, each month for your P&L, Balance Sheet, and Forecast, and each year to create your budget.

Consistent visibility of these key financial reports will give you control of your finances. The next time a big opportunity comes your way, you’ll have the freedom to grab it. And when big decisions need to be made, you’ll have the confidence to decide quickly.

And if you don’t know where to start or don’t have the capacity to manage these items on your own, let’s chat! Forge Financial & Management Consulting offers outsourced accounting and forecasting services that can help you get your business finances back on track. And as an added bonus, try out our free budget template to hit the ground running!