If you are a business owner, consider asking yourself about the frequency of your reviewing or even looking at your financial statements. If you leave this task for the end of the year or completely rely on your financial advisor, it is time to rethink your ways. It is important to regularly review your financial statements, such as P&F statements, balance sheets, etc.
Knowing what your business’s finances look like at any given time is crucial for growth and success. Business owners in Louisville who fail to engage in proactive management and only do reactive management have often failed in their endeavors. If managing finances along with handling a business is becoming too much for you, hire accounting professionals in Louisville.
Top benefits of monthly financial review.
- Verifying transactions.
Reviewing your bank and credit card statements should be a part of your monthly financial statement review of your business. Make sure that the transactions being posted on your account have been initiated by someone from your business only.
Reviewing your financial statements allows you to spot any signs of fraud, such as the usage of your company’s credit card without authorization. It also allows you to identify any errors that your bank may have made.
- Tracking progress.
Companies can track their progress using financial statements like income, balance, and cash flow statements. Income statements show if the company is making more or less money over time. Balance sheets show their assets and liabilities.
Cash flow statements track how cash comes in and goes out. By reviewing these statements monthly, companies can see how they are doing financially and make decisions to improve.
- Tax planning.
You may lose 30–40% of your profits to taxes. One thing that every business owner should do before making any decisions is to consider them from a tax perspective. There are sometimes methods for organizing transactions to reduce your tax liabilities.
Business owners wait to analyze until after a transaction is finished. By not reviewing your monthly financial statements, you can lose a large amount of money. Hiring a professional accountant is always recommended for such tasks.
- Notify you of any problem early.
Reviewing your monthly financial statements helps you stay on top of your receivables and payables. If a customer delays paying an invoice, there is a chance they might never pay the balance due.
Therefore, reviewing your financial statements is very crucial to know which customers have paid and who have not paid. Also, it makes sure that your business is paying what it owes.
Now that you know the benefits of reviewing your finances every month do not hesitate to reach out to an accountant. Hire a professional for your ease today!
