Whether you have an internal corporate accounting department or you outsource your accounting to a reputable firm, as a business owner, you need to review your financial statements regularly. You are responsible for the finances of your company, so these are reasons you should regularly check your financials.
Analyze Your Financial Health
The financial health of your company does not automatically improve when your revenue increases because you may be spending more of this revenue to maintain production or other functions. In addition, it may take a longer period of time to receive this revenue. Also, if you acquired debt to increase production to grow your revenue, you may have higher debt payments.
You need to know where your money is spent, especially unnecessary spending or spending to earn greater revenues. Make sure the increased revenue more than pays your increased debt or leasing payments. Your greatest assets in determining this are your cash flow and profitability statements.
Remind You To Follow-Up on Invoices
If your business is supported by invoices, you may have forgotten to follow up on outstanding invoices once or twice. Because invoices are typically due at the end of the month, you may receive massive influxes of cash during these times. Some invoices may get lost in the shuffle. When you review your financials, you may find invoices that are months old. This reminds you to get in touch with these clients and see where your money is. Also, when all your revenue arrives at the end of the month, after weeks of little to no payments, you are more likely to spend it on monthly bills, which can significantly impact the profitability of your sales.
Recurring Bill Mistakes
You likely have recurring bills for your company. For example, you may have regular loan payments and static operating costs that automatically come out of your accounts every month. However, even the most reputable providers make mistakes. Therefore, look over your agreements to determine your monthly obligations, and then, compare these figures to your financials. Have you been paying the right amount each month, and are there additional charges with no explanation? Now that you have the proof, you can contact these service providers and get your money back. You may think, what’s a few bucks if I can save myself 15 minutes on the phone, but every dollar is valuable, and spending those few extra minutes on the phone can save you significantly down the line.
Don’t just assume your corporate accounting department or service is making sure that your financials are in order. As a business owner, you are responsible for ensuring your payments and revenues are correct and received on time.