Knowledge Is Power.
Having clean books is a great goal, but if not set up well, they won’t be very useful for doing anything other than filing your taxes.
Over the past few years, I have worked with clients to dial in their books to help them understand how things are progressing over the year and to plan into the future. Once we have worked with a client for a few months, all of their business finances should be up to date and historically accurate at least back to the beginning of the current year. We like to spend a few months getting to know our clients and how their money flows in and out of their account. This process gives us insight into what information they would actually find useful in pulling reports from their finances. Then the fun part begins! Ok, maybe “fun” is a stretch. It’s not spring break in Cancun, but it is definitely my favorite part of the bookkeeping process.
We work with clients to tailor their chart of accounts to give them detail where they want it and help them understand their business better. This includes breaking income into large subsets that help the client to analyze where the money is coming in and what is working and what isn’t. Next, we break out expenses specifically associated with delivering goods or services to the clients and put them into Cost of Goods categories. Finally, we break expenses into essential and secondary sub-categories to prioritize expenses and make reports easier to understand.
Once we have a really good structure, we can pull reports that help the client understand their business, catch issues early and work towards goals in a systematic way. Here are some of the most useful reports we share with clients:
Profit & Loss: Year to Date by Month
This report shows income, cost of goods and expenses with totals for each section and a bottom line net income. Breaking it out by month helps identify trends and flow over time. Looking at this history allows us to watch gross income and set goals for those top line numbers in our various income categories. It also helps us keep an eye on the costs of client deliverables and the expenses of running the business day-to-day.
Profit & Loss: Year Over Year Comparison by Month or Quarter
This report is similar to the above report but is great for understanding seasonal cycles, changes in top or bottom line revenue over time and to evaluate business growth for future planning.
Accounts Receivable Aging Reports
For clients using invoicing within Quickbooks, this report can be super helpful to stay on top of client payments and to make sure that you have proper cash flow in your business. Delinquent clients may require a revision of payment policies, a decision to send to collections or a strategy to write off unpaid balances after a certain amount of time.
Cash Flow Projections
This is the crystal ball of financial reports--it allows us to look to the future. It cannot be generated out of Quickbooks, but can be built using a combination of historic data, contracts or clients on deck and client goals or anticipated expenses and income. We can also record actuals into this report each month to see where we are on track and where we need to recalculate.
Budget to Actuals
Some versions of Quickbooks allow you to utilize a budgeting feature that you can lay out income and expense budgets or goals for the upcoming time frame. These can be set up for the year as a whole, quarters or months. Once you have the budget set up, you can pull reporting to compare how your financial actuals compare to the budget or goals you laid out. For those who don’t have the versions of Quickbooks that support this feature, we can create a spreadsheet that functions in the same way.
As your business grows and your finances get organized, good reporting can help you understand everything better and help you plan for the future confidently.
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Missoula Bookkeeper has made my life easier. They are direct, organized and personable. I feel like they really care that my business succeeds! -Keli Lake, Keligreen
Simple products on a big mission! Keli makes healthy, safe and biodegradable soaps, candles, and simply the best laundry soap ever. Her passion is reducing plastic waste by offering refill service and doorstep delivery in Missoula. She works so hard for the planet, and we think she’s cooler than the other side of the pillow! Damn, we love Momtrepreneurs.
Click here to check out the Keligreen website.
