How to Leverage Information in Business Accounting Statements for Smoother Operations
When you're running a business, financial structure and cash flow are two major issues that can regularly cause problems. According to the Small Business Administration, 28% of business bankruptcies are due to these problems. Fortunately, if you're keeping your books going, you already have a great tool to leverage to your benefit: accounting statements. Here's how to use them as a vital source of business intelligence.
To start, make sure that your accounting processes are keeping your business intelligence up to date. That means that your money coming and going out are being recorded accurately and in a timely manner. Though it can seem like a pain, especially when everything else is taking up your time and attention, it's a vital aspect of your business that must remain current.
Look for trends. Does your business always have multiple small orders for materials around a big event or particular time of year? Try consolida
ting those orders to take advantage of bulk sales. Paying a lot of overtime to accounting when it's time to send out W-2s? See if you can make the process more efficient or automated to reduce expenses.
Next, look at the direction your business is going in as a whole by comparing your financial statements from one accounting period to the next. Is it growing? Are you starting to see a downward trend? Noticing these issues in your accounting statements allows you to take positive action to improve growth or reduce losses before they become a serious problem.
Another vital area is looking at your budget. Taking the time to set and stay within a budget allows you to keep your business growing. Though it can be difficult at first, set up some targets to stay within for particular income levels. This will help keep your expenses from becoming overwhelming.
By using the information in your accounting statements for business intelligence, you can keep track of your business' income and expense trends, project future income and growth and better manage cash flow issues. But what if you're not quite sure how to read your accounting statements or need help setting your accounting up properly in the first place? The experienced accounting professionals at AccountRely can help. Please reach out today to get started.