Tina Dettman-Bielefeldt column: Financial reports key to any business

8:22 PM, Apr. 10, 2013  |  Comments
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Accounting is one topic that often makes an entrepreneur's eyes glass over. Since many small-business owners tend toward the creative, the last thing they want to do is work on financial record-keeping.

Green Bay SCORE volunteer, Mike Hall - CPA, business consultant with QuickStart, Inc. and owner of Hall Consultant Services - recently helped a SCORE client understand QuickBooks, a software program used by more than four million small-business owners in the United States.

"Many business owners have a mental block when it comes to accounting," Hall said.

"That's what I help with, by easing whatever part is uncomfortable. They don't have to become accountants, but they do need a basic understanding of metrics within the company in order to run their business properly."

Hall says that it starts with a review of the business and whether it is a startup or existing. The setup will depend on the number of employees, invoicing, accounts receivable, types of reports and type of business.

"On a basic level, you need an accurate balance sheet, profit and loss statement, and an understanding of cash flow in the business," he said. "Where is the money coming from and where is it going to? What is the timing? Just because you show a profit doesn't mean you're rich in cash."

In order to keep the cash flowing to run your business, Hall says that accounts receivable should be reviewed on a daily basis and that calls should be made when customers get past due. The customers often try to stretch out the payment period as long as possible, but that could put a business in peril.

QuickBooks should always be used in conjunction with a business plan. There is an area in the program where the business plan projections can be entered and comparisons made between actual and projected figures.

"With that information, you can be proactive in making changes," Hall said.

"It keeps you from going down that same bad path, and lenders like to see these reports. A business plan isn't a document that, once you get it finished, you just throw it in a desk drawer somewhere. It is a living, breathing document and as things change, the information from QuickBooks should be used to update it."

In working with clients, Hall sets up templates to make data entry easier.

He avoids overly specific account information, and uses industry information to compare actual results with average ratios and benchmarks. For clients who never gain a comfort level with QuickBooks, he suggests that they work in conjunction with an accountant or bookkeeper.

"If it's really hard for them, business owners might want to hire someone," he said. "They need to decide what they're good at, and might gain more by promoting and selling their business than by being their own accountant."

Regardless of who does the entry, Hall advises clients to get comfortable enough with the reports so they have an understanding of where the business is going. "It's not exciting to talk about financial reports, but the information is essential to the success of the business."

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