Your are in business for yourself, but you are not by yourself. Utilize Bookkeepers, Accountants and Tax Professionals to help you answer these Five Important Questions to get your business off to a great start!
1. WHO ARE MY TOP CUSTOMERS?
From your financial reports, you should be able to identify your top customers through sales and service purchases. Not only should you know those current year top performers, you should know your prior year top performers. How much are they spending with your business? What products/services are preferred by those businesses? How can you build a better relationship with those customers through direct marketing? A good Accounts Receivable report can show you the past, current, and predict future purchasing trends with those customers.
2. WHAT CUSTOMERS OWE MY BUSINESS MONEY?
Your Accounts Receivable aging report details what customers are delinquent in payments. If you have payment terms NET 30 days, and customers typically pay late, this will effect how you meet payroll, rent, and make payment to your vendors. A good bookkeeping system will send email reminders to those late payees, as well as automatically deposit payments electronically into your designated business banking account.
3. HOW MUCH DO I OWE MY VENDORS?
Lights, Heat, Rent, Payroll — How much is owed and do I have enough cash on hand to keep the business going in case of an emergency (COVID-19)?? Being on top of paying bills in a timely manner is important to keep day to day operations running. Also, in case you need to take a loan for the business – how timely you pay your bills will come into play. Software has made it possible to make payments on time, but if you are busy with other aspects of your business your Bookkeeper is always ready to assist with making payments and running those reports to show you cashflow available.
4. HOW MUCH MONEY DID I MAKE?
I bet you knew that is the income statement – The income statement is one of the most valuable reports, and can be set for different time periods – monthly, annual, quarterly. The income statement will show how much sales and expenses have been earned by your business. If your sales exceed your expenses, congratulations, you have a profit. If your expenses are more than your sales, your business is losing money. That is where your friendly Bookkeeper comes in. He or She will make sure all income and expenses are being captured to show the true health of your business.
5. CAN I AFFORD THAT NEW EQUIPMENT?
Ah, where can I get that information from? You guessed it! Your Cash Flow Statement. The Cash flow statement shows Sources (Where the business generates money) and Uses (Where your business spends its money). So if your business is generating a profit, but you are perplexed at why there is no funds available on hand to buy new equipment, the cash flow statement will answer that question.
In addition to these reports, I can’t emphasize this enough. PLEASE, PLEASE, PLEASE reconcile your bank account on a monthly basis. And don’t use your neighborhood student at $20 per hour to make these entries. There are consequences to incorrect reconciliations of banking entries; your accounting reports will be incorrect, and it will be a headache to redo a large number of incorrect entries in time for year-end activities.