As summer winds down, your business’s financial statements may be due for a quick checkup. Here are several ways to help determine the health of your business prior to year-end.
Reconcile your balance sheets. Reconciliation of each asset and liability account should be completed every quarter. A well-supported balance sheet can guide decisions about cash reserves, debt financing, inventory management, receivables, payables, and property. Regular monitoring can highlight vulnerabilities, providing time for corrective action.
Determine your cash flow situation. Do you have enough cash to adequately handle principal and interest payments? Calculate your cash flow to ensure you can handle both current and future monthly loan payments.
Check revenue performance. Take a look at your income statements and see how your revenue has performed so far this year versus your projections for the year. If revenue varies from what you expect, get with your sales and marketing team to pinpoint what has gone better, or worse, than expected and make any needed adjustments.
Analyze your expenses. Put a stop to disappearing cash by conducting a variance analysis of your expenses. What did you expect to spend so far in 2021 on salaries and wages compared to what you actually paid your employees? What about other big expenses like rent or insurance? Take the amount of money actually spent so far in 2021 in each of your major expense accounts and compare it to your spending forecast. Then create an updated forecast for the balance of the year.
A review of your financial statements now will help you to be prepared if you need to navigate any obstacles or capitalize on potential opportunities to expand your business.
And while this is a handy checklist to help keep you on track, we know you may have the need for further analysis into your business’s financial statements. That’s exactly what we’re here for. Reach out today to learn about ways to boost your business’s financial health.