Are your books real-time or redundant?

Does your financial information help you make daily decisions? Does your financial information give you meaningful insights to develop a clear plan for the future? Are you digging deeper than reviewing the reconciled cash balance and examining net income for business management and financial analysis?

Let’s start with some questions that I’d like to ask every business owner:

  1. When was the last time you looked at your Income Statement or Profit and Loss report?
  2. When was the last time you looked at your Balance Sheet?
  3. How up-to-date were those reports when you reviewed them?
  4. How often do you look at either of these reports?
  5. How often would you like to look at an up-to-date version of these reports?

If you get to question #1 and are wondering what those reports are, see Sharon Blaha’s post here.

Otherwise, let’s focus on your answers to questions #3, #4, and #5.

Question #3 – How up-to-date are your reports?

The timeliness of your reports may be a function of your process. If you do your books right away on a monthly basis with the receipt of the bank statement, then your books are about 2 weeks old when you’re done.

If your outsourced accountant or CPA prepares your books and issues a compiled financial statement on a monthly basis, your financial reports are probably at least 3 weeks old or older. Does financial reporting from almost a month ago help you make decisions today?

Question #4 – How often do you look at the Income Statement and Balance Sheet?

Even if you update your financial information on a monthly basis, how often do you sit down to digest that information? How well do you understand that information? Do you take your compiled financial statements and throw them in the file cabinet just in case the bank wants to see them later?

Many business owners don’t really look at their financial information. They “fly blind” and manage the business based on the cash in the bank account and the stack of bills on their desk. If you don’t look because you’re happy with the timeliness of your current system and current level of financial literacy, read no further.

If you don’t look because you don’t understand the information but want to learn, that’s ok, in fact perfect. I have plenty of success stories of watching business owners when the light above their head turns on bright and they finally start to understand the finances of their business.

Question #5 – How often do you want to look at up-to-date reporting?

If you already understand your financial statements but suffer from decision making with dusty information, consider taking a hard look at innovative accounting software providers that are making it possible to keep your bank information up-to-date daily and even hourly if you desire. If you haven’t heard of bank feeds, I just want to let you know there are solutions to old information problems.

If you’re serious about real-time reporting think integration. The most cutting edge accounting packages that use bank feeds may not have all the “horsepower” of your traditional accounting packages. However, the good ones have many integrated applications that may be able to restore that horsepower and add the capability of real-time reporting.

I don’t really advocate any one particular accounting platform, as the accounting software you use needs to fit you and your business. There are a few best of breed accounting packages with which I have personal or customer experience or exposure and I have prepared a comparative matrix of major accounting solutions that I will share with anyone that sends me a message requesting that information.

Also, feel free to connect with me on LinkedIn.

Business Accounting

Shane Eloe About Shane Eloe

Shane has 12 years of experience in public practice and specializes in working with agriculture and construction businesses. If you have questions for Shane, please send him an email. To see his latest posts click here. Click here to connect with Shane on LinkedIn.

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