Tracking

Financial tracking summarizes the data in your accounts to show you different aspects of your business’s financial situation. For example, a profit and loss report compares monthly income to monthly expenses to show whether your business is selling enough

Financial tracking summarizes the data in your accounts to show you different aspects of your business’s financial situation. For example, a profit and loss report compares monthly income to monthly expenses to show whether your business is selling enough products or services to cover costs each month. A cash-flow projection shows similar information, but includes other sources of income such as capital contributions from owners or loans (that is, not just revenue from sales). It also organizes the information slightly differently to show you whether the timing of your income is adequate to pay your bills on time.

By generating reports, you’ll be able to see trends and patterns in your business’s finances and identify profitable opportunities to pursue. You’ll also avoid letting your business simply drift along–or worse, run it into the ground. Here are a just few ways that analyzing your financial reports will help your business:

– You’ll be able to price goods and services more competitively, pace growth more effectively and trim costs strategically–for example, you might cut back on travel expenses or outsourced services that aren’t helping to generate sufficient income.

– You may be able to reduce taxes by timing your purchases strategically and claiming all your deductible expenses–things that often escape businesses with disorganized records.

– You’ll be able to manage your business’s cash flow, ensuring you can pay important bills on time. Cash-flow management is a critical element in every business. When it’s done poorly or not at all, you may find yourself short of cash when it’s time to pay taxes, payroll or other crucial expenses. This is exactly the type of scenario that forces businesses to close up shop for good.