- You're not sure if your systems are working anymore.
- You finally admit to 'yourself and another person' that you may not be reading your P&L correctly.(!)
Your financial reports and how they are constructed are important for you, possible investors, and lending institutions. Making sure that all of your assets are in there will help tip the balance, in a Balance Sheet. (Ummmm.... that's poetic justice here, you can never unbalance a balance sheet).
The information that people are often missing from their reports are:
- Personal equity spent.
- All furniture, fixtures and equipment
- Investments in websites
- Correctly detailed Credit Card expenses.
- Leasehold improvements
A "Cash Flow" report is always going to be theoretical. It's based on the assumption of money coming in and money going out. The second one you can control, the first one you can't. Having a report of your expected receivables for each 2 month period can give you a basic idea. I don't have to tell that's it's not something you can count on.
Look at your receivables. Do you have invoices in there you pretty much know you're not going to collect on? Talk to your Accountant this year and write those babies off. They are doing you little good where they are. Sometimes it's better for you to take the loss.
Yes, Accountant! Do you have one? Do you love them? You should on both counts. In the same way you run things by your lawyer before signing contracts, having the same relationship with your accountant is very important.
My main point here is that if you don't "get" something, make sure you find the answers to your questions. It's your business, you should make the most of what you've got by understanding the best you can.