Habits to Keep Your Financial Statements Flawless
We asked CPA's and CEO's what habits business owners should adopt to prevent bad financial reporting. Here are some pro tips.
Start with COGS
Steck advises, “If you are going to focus on your financials or have areas you want to clean up, start with the COGS.”
“Cost of goods sold is where you can lose information that is critical. Spend time on your COGS so you can understand what your true gross margin is. That will help you make better decisions.”
Have a Bookkeeping System
Loanry CEO, Ethan Taub says, “The first thing you need to do is have a bookkeeping system that works best for you and your team.”
“There are many out there, so you need to do the research, but fast. If you are already starting your business, this needs to be done before anything else. Having a schedule as for when this is done is also important. If you know you get new clients every week, 2 weeks or a month, that should be when you are bookkeeping all your finances, to have solid records, but also keep track of all work.”
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Use Technology to Track Spending
Kote recommends having processes in place to track expenses. He created Airbase to solve the problem of executing payments and accounting for non-payroll spending.
“I now use it to lock in a pre-approval process, make payments safely and easily and sync everything automatically to the general ledger. We’ve got control, a faster close, and better visibility so that we can fully manage the business.”
To keep tabs on operating expenses, Crowell uses Divvy, expense tracking software and corporate card. “We switched all of our expenditures to a Divvy card so we can control the budgeting right up-front instead of spending then reworking the budget around that.”
Reconcile Bank Accounts
Viridis’s quick tip is to pull the most recent reconciliation report from your accounting software for each bank and credit card account.
“The only items that should be listed under 'unreconciled' or 'uncleared' are transactions that happened recently but haven't cleared yet, such as a check you issued that hasn't been cashed. 99% of activity outside these parameters are potentially a serious red flag.”
Cross suggests that every business owner prepare for future success by having what she calls "The Fab 5."
3. Business Coach
4. Admin Assistant
5. Business Mentor
Bonus: get a Therapist
Are you frustrated by the lack of clear financial reports to help you make decisions on how to scale your business or increase your profitability? A CFO can help you. Schedule a free 30-minute consultation with CFO Services Director, Ryan, today.