Accounting Enigmas

April 13, 2006

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Managing your business finances is one of your most critical tasks. Are you getting your financial statements regularly? Are they complete, timely, and accurate? Neglecting good accounting habits can be dangerous to your financial health.

Or do you have the statements but haven't studied them or acted upon them yet? Remember what kind of a sin sloth is? Yes, we know it's boring detail work but it's necessary boring detail work. You can't fix what you don't know about. Ignorance is definitely not bliss!

Here are some downloadable forms that may help you to control your accounting chores:

In the Business Tools area, you'll find three tools that may help you get better control of your finances:

Analyzing your financial statements is another critical task. How reliable is your cost accounting? Take a long hard look at the cost-of-goods-sold figures.

The study of business ratios and cost/profit analysis is essential to your success. If you made up a budget, how does it compare to the results you've seen so far? You may need to adjust your expectations and your business plan accordingly.

Suppose your biggest customer doesn't pay you on time (or at all.) This problem won't be fatal if you've established a relationship with a reliable credit bureau or collections attorney and you communicate with them so they can do their job if the need arises. Do you have a current list of aged accounts receivable balances? It's important to know which customers are using you as their bank loan officer and which ones can be relied upon to pay promptly. Scanning the 30-60-90 day account balances will give you an ongoing feel for this important data. Scrupulous attention to slow payers will help your cash flow as well as alert you to a potentially serious collection problem early on.

Accounting is truly the "language of business." If you faithfully keep your books and read your financial statements, they will tell you the whole story of where your business has been, where it is now, and where it's likely to be down the road. This knowledge will give you better control over the destiny of your firm, both short and long term.