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Stop the confusion with your financial statements

Are you dealing with a lot of confusion when it comes to your financial statements? If it seems to be challenging and frustrating for you to manage your statements and to understand them, it may be time to contact a good financial advisor. They not only have the experience you need but they have extra tools that will help such as being able to provide you with tax preparation help and also payroll help. With tax laws changing all the time and a lot of confusion surrounding many of the laws, it helps to have someone that knows what they are doing and someone that can easily provide you with solid advice.

What are the main financial statements you will deal with? The common ones that you need to properly understand in order to run an effective business include the following:

  • Balance sheet

  • Income statement

  • Cash flow statement

Let's begin with the balance sheet as this is one of the most common financial statements you will see all the time. The balance sheet allows you to have an overall financial perspective of your company. Many people call it the "map" or the "life" of your business. It helps you to see all of the things that are going on within the business and helps to shed some light on why your expenses are so high or why you are struggling with your accounts receivables. Take the various balance sheets and compare them with past balance sheets in order to see how things have been able to change from the previous years and what you need to consider changing with marketing or learning how to understand the seasonal sales fluctuations and other things.

Learning to look at all of the details and numbers on the financial statement will allow you to see where the company has been and where it is going. You will be able to see why older marketing strategies just aren't as effective anymore and why it may be time to change things up a little bit. A lot of business owners only focus on the cash flow statement and they don't look into the rest of the balance sheet. While the cash flow provides you with an overall look of your company, you still need to know all of the different aspects of it in order to make correct decisions and to comfortably move your company forward.

The income statement will show you the cost of the items that are used. This basically means it will be able to show you the sales value and all of the costs that are tied to producing products and creating the sales value. It also shows you how much money you spend on getting the products delivered to your customers, which will help you to look for different companies to work with such as choosing a new shipping company or working with different vendors.

Next you will need to learn about your cash flow statement. As you may already be aware of the cash flow statements is one of the most important statements. Your cash flow is how you stay afloat and it's what pays for a number of things from your employees pay to your vendor's bills. How do you fix your cash flow problems when it seems like your accounts receivables are getting out of control? You need to start working on collecting the money from your customers in a timely manner. The longer you extend payment terms to the customers, the harder it is collect the funds and the harder it will be for you to pay your vendors.

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