Business finances and numbers can look intimidating, but they provide a clear picture of where your organization is heading. Most business owners know how much money is coming into their bank account, but when you ask what their net income was during the year, they will struggle to answer that question correctly.
If you’re one of those owners who aren’t fond of numbers and don’t have a clue what intangible assets mean on your balance sheet, here’s how you can get a better insight into your business’s finances.
Understand the Use of Financial Reports
The first step is to understand why the various financial reports are made and how to use them. Your main reports will be the balance sheet, income statement, and cash flow statement. These documents will tell you everything you need to know about the financial health of your businesses.
A balance sheet summarizes all your assets and liabilities over the financial year, while your income statement will tell you how profitable your business was due to its operations. A cash flow statement depicts the influx and outflow of cash in your businesses. These reports tell you the expenses that took up most of your budget, worthwhile investments, liquidity, and much more. Sit down with your finance team or accountant to understand how to read these statements.
Have the Right Team
You can only rely on the quality of financial statements and your team’s expertise to understand these reports if your finance function consists of the right people. Your finance department should have the necessary expertise and qualifications to conduct consistent financial analyses to determine your company’s health. Even if you operate a small business and have one focal person for your business finance, they should be reliable and have the required knowledge.
Furthermore, you also need to provide your finance team with the right tools to produce reliable financial statements. There is software in the market you can use for your finance and accounting needs. Having your inventory management software integrated with accounting software such as QuickBooks will provide accurate stock reports.
Invest Your Time in Your Business Finances
As a business owner, you might have other priorities in your business that may need more attention. However, it is important to invest your time in understanding your business finances. It is always good to have a reliable finance team that can take care of all financial matters of the company, but you need to spend more time with them to get an idea of where your business stands. Use the data they produce to measure your progress towards the goals of your organization.Don’t leave the entire responsibility of your financial health to your company’s CFO or finance department. Actively participate in the finance function and invest in your team with the right tools to help them develop accurate reports that will help you in your strategic business decision-making.
If you’re looking for a one-stop solution for your ERP needs, then check out AltheaSuite. Our cloud based inventory management software offers QuickBooks integration that will provide you with instantaneous stock reports. You can get real-time sales reports that will help you analyze the operations of your business and can help you devise ideas to improve them. You can also book a demo or get a free trial of our software for your business.