Company executives are often overwhelmed with their finances. They see the money coming in from clients and the money going out to vendors. They pay themselves out of the general account but don’t have a true salary. There is still cash at the end of the year but a lot of bills to pay. For these small business owners, finding out what money the firm is really making is a worthy goal. It helps to pay taxes, get loans and build out a larger business. For that reason, more and more executives are getting accountants to help with this process.
The first thing to do is review your chart of accounts. Each type of revenue and expense should be categorized with a code. Then each outlay should be carefully assigned those codes and put in order. This allows the the firm to quickly arrange all future revenue and expense tracking.
Next, this tracking is placed into an automated, computer based system. Link them to the bank account so they are verified and accurate. This will provide a true cash accounting system that is digitally documented.
After that, the more advanced analysis can begin. Companies can perform variance analytics by projecting a budget and seeing how close or far off they were when the time comes. They can also slowly adjust pricing on products to see how it effects sales and profit margins. Having this information in hand truly can make the difference between a highly profitable firm and one that is just getting by.
Foster Financial is a leading Arizona based professional CPA. For more information, please contact us.