Is your accounting staff spending a ridiculous amount of time spinning wheels on something that’s not going to make a difference?

Case in point, a medium-sized non-profit I worked with had a prior director of finance who used elegant accounting where it wasn’t needed, resulting in reports that came six weeks too late for decision-making.

You can imagine how that delay frustrated the executive director.

What is elegant accounting?

It’s highly technical and time-consuming accounting that large companies bound by SEC reporting requirements need. Their accounting must be done in a specific way for compliance reasons and for investors and other stakeholders.

That’s not you.

And it wasn’t the client I worked with.

Your accounting staff does need to adhere to good accounting practices, recording transactions in a way that generates insightful information for you to lead the organization. But over-engineered elegant accounting is of no benefit to small and mid-sized business owners.

What my client did need (and what you need, too) are timely financial reports that allow you to make decisions and understand what needs to change in the business.

Which timely reports do you need each month?

Ideally, you’ll review these “Big Three” reports:

  • Profit and loss statement
  • Balance sheet
  • Statement of cash flow

Two others that I highly recommend all business owners see monthly are your accounts receivable and accounts payables reports. Aging accounts receivable can be a “leaky bucket” and a reason for cash flow trouble, so you want to stay on top of that.

As long as your accounting staff provides these reports in a succinct, easy-to-understand format, you will have the story of what actually took place in your business the previous month.

Equipped with that information, you can make decisions and course corrections if necessary.

 

 

 

Your CPA Shouldn’t Be Your CFO!

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