Do you forecast, prepare, analyse and interpret your financial statements?
October 20, 2011
by Justine Parsons
Businesses require regular information about their financial situation and performance in order to continue growing and developing as a successful business. While it is very well to collect your annual accounts from the accountant, the greatest benefit to you is being able to understand what the numbers mean for your business, both now and for the future.
Put simply, if you don’t forecast, prepare, analyse and interpret your financial statements on a regular basis, you are essentially running your business blindfolded. Neglecting the financial performance of your business means you will have difficulty spotting trends in time to make changes. For example, you might not notice a fall in demand for a particular product you offer until it is too late to modify the product and you are left with excess stock on hand and fewer customers. If you identify a problem early enough, sometimes all it takes is a minor change to keep the business on track.
Long term business success rests heavily on the idea that a thriving business is one where the business owner:
- Has the discipline to keep a close eye on the financial indicators of your business
- Does something when the warning signs appear, rather than ignoring them to the peril of the business.
For instance, when debtors start taking longer to pay, the business owner may decide to introduce a prompt payment discount.
Remember, you are not in business simply to make sales; you are in business to make profits and to make a return on the money you (and your investors) have invested into the business.
Not sure where to start? Email Your Virtual Assistant to discuss how your financial statements can be used to maximise your business growth and directions.