The Top 5 Reasons to Review your Company’s Financial Statements
Financial statements are a snapshot of a company’s financial health. They provide insight into its performance, operations, and cash flow. Financial statements are essential since they give information on a company’s revenue, expenses, profitability, and debt. But if that isn’t enough to convince you to look at them regularly, here are our Top 5 Reasons.
- It Alerts You to Issues Before They Become Major Concerns
Did you pay something twice? Did your client’s check bounce? Are you doing work for someone who hasn’t paid previous invoices? Is someone using their company credit card to buy items without your permission? What if they use the company credit card to purchase personal items or skim money? Knowing your cash flow can prevent an issue from becoming a big one.
- Creditors Require Financial Statements
Financial statements provide detailed information to creditors on how the company is doing financially. If the information is incorrect, you may not qualify for loans or other financings, which can prevent your company from obtaining equipment and supplies.
- Financial Statements are Required by Investors and Buyers
Are you looking to sell your business or find investors? You are going to need to provide financial statements to them. If the information is wrong, it could cost you the deal. Make sure your income, expenses, profits, losses, and debt are correct to you can close the deal.
- Find Mistakes that Can Cost you at Tax Time
People make mistakes; sometimes, not applying liabilities to the correct accounts can cost you. Suppose you see a massive liability in your financial statements, such as outstanding IRS Payments. In that case, it is essential to ensure it was a clerical error and not an overdue tax obligation. The IRS can really come down hard on a company that owes them money.
- Planning Your Future
Want to buy new software or hardware? Need to train new staff? Have you outgrown your space? You can create a budget and plan for these expenses if you understand your statements. Without understanding your money, you’re at the mercy of it, making it difficult to grow.
These are just a few reasons to read your financial statements. We get it. Not everyone likes numbers as we do. So, if you want to talk to us about how to make the numbers work for you, make an appointment today.
