Known financial position is the place to be

If you were driving 80 miles per hour, in the dark, with the lights out, in the direction of a cliff, it would that someone will yell, “STOP?”

Does it produce financial statements – balance sheet and income statement – every week? Does it scan sales, costs, cash flow and debt every week? If not, you may be heading for the precipice.
STOP. And find out. This is the year. This is the day. From now on… you’re going to know.

Reach KFP.

KFP represents the financial situation known. KFP is essential for its success and profitability. “Known” is the key element. It may be that you are losing money, or more of what I want to be in debt. Find out how much and how deeply. That is the starting point. Financial reports are the score in the game’s business card. Always score can be improved. But you should know where at the moment.

This seems obvious. But from my experience as a business consultant, nine of every ten business owners do not know what your financial position. There are a couple of reasons for this.

or they don’t know how to keep track.

or they are afraid to look, because I do not know how bad that is.

If you are the one in ten runs, opinions and understand financial statements, congratulations!
If not, well that’s going to change starting today.

Learn how to keep track

You will be in a financial position known when:

or you can generate reports of income statement and balance sheet and trust that the information is accurate and up-to-date.

or you can go through the reports line by line, account by account, and understand what each amount in dollars represents.

I recommend that you do your accounting ‘at home’. You can not wait until end of the month to find out the result. You need to know the result, while the game is underway! You need to run financial reports every week to check sales, expenses and cash flow. You must compile a full set of financial statements at the end of each month to comply with the tax collector, as well as examine and review your financial strategy. The best way to do this is through the generation of basic financial reports “at home”. Your accountant can support their efforts and review your task.

Your accountant may be able to train in the use of their accounting software, or recommend someone that can do it. You can also communicate with the software company’s accounting for a list of qualified coaches. Current computers are so fast and accounting software is so simple… can do the accounting in your store.

However, you will need some help to reach a KFP.

You need a good accountant. Most of the counters only prepare tax returns. A good accountant will help you develop a system of accounting that provides the financial information they need to make good decisions. A good Narrator excited when you tell them you want to learn how to read and use the financial reports. A good accountant does not feel threatened when you said you that you want to move the accounting system “in house” instead of sending it to him.

A good accountant is meticulous about data entry and get their entrance in time. In a small company, it is possible to the position of accountant. This will serve you well in the long run. Enjoy your situation. Find out double entry accounting and how make the most of its accounting system. When you are ready to give up the post, you’ll be prepared to work well with your accountant for information call time, accurate and relevant.

Reach exercise KFP

Schedule a meeting with your accountant and your accountant for some time this week. Go through the leaf of balance sheet and income statement line by line… account by account. Ask the following questions:
or what the titles of the account? (If you don’t know what it means earnings retained… ask. If you don’t know what “Others” it refers to ask…).

or where do the amounts in dollars come from?
or what are the amounts in dollars?
or how to get the information entered into the accounting system? Review the data flow and see where it ends in the financial reports.

Work together to answer these questions:
or how can you structure a Plan accounts to better reflect the way we do business?
or how we can separate the information so that we can know how different divisions of the company is carrying out? Do I have to create divisions in the accounting system?
We are or track information you don’t really need?

or what is needed to generate current and accurate balance and reports the State of results at any time?
Finally, check the final list of month together. I have included a copy of this article. This checklist ensures that you stay in a KFP. Ideally, your accountant is completed checklist. Your accountant can help by checking to ensure that their reports are accurate, and that all the legal and tax compliance requirements are handled. Commit to complete the checklist of every month, from this moment. (Would you like the Word document so you can customize this form for your company? Go to http://www.barebonesbiz.com, click on the contact page and request the final month check list.)

Don’t delay. Insist on the fulfilment of this week. Insist on reaching a KFP later this month. It is so important.

“If there is lack of awareness that there is a way to acquire, and is cheaper to learn before they make an investment in shares and artifacts, tools, etc, than it is to learn later from sad experience”. ~ Wesley A. Fink – accounting and cost finding, published in 1918.