The Value of Reviewing Your Monthly Statements
As a small business owner you understand the importance of managing your finances effectively. However, with so many responsibilities on your plate, it can be easy to let reviewing your monthly financial statements fall by the wayside. You may feel like you don't have the time or expertise to review the statements thoroughly, but the truth is that there is great value in taking the time to do so.
In this blog post, we'll discuss why reviewing your monthly statements is so important, and how it can benefit your organization. We'll also address some common objections that small business owners may have to reviewing their statements (maybe they’ll feel familiar…), and provide solutions to them.
Why Reviewing Your Monthly Statements is Important
Knowing where you stand financially is crucial to your confidence and your success. Reviewing your monthly statements is how you gain that knowledge. But there are some other immediate benefits that point to the importance of monthly review as well - let’s talk about a few of them:
Peace of Mind: Reviewing your financial statements gives you the opportunity to ensure that your finances are in order. By completing this review on a regular basis, you can identify any errors or discrepancies and correct them before they become bigger issues.
Key Insights Your Business: You need reliable information to make informed business decisions. With up-to-date financial information that gives you insight into profitability, margins, changes in revenue and expenses and more, at your fingertips, you can make decisions based on solid data, rather than guesswork or assumptions. This can help you to make strategic decisions that will benefit your organization in the long run.
Cash Flow Insight: Even if your business is making a good profit, cash flow challenges can still present themselves. Using your financial data can help you understand where the cash flow issues are stemming from and help you create strategies to overcome them.
The Ability to Seize Opportunities: Reviewing your monthly statements can help you to know whether or not you are prepared to seize opportunities as they arise, and even plan your ongoing activities to create a margin that will ensure you can say a confident “yes” when it really matters. By carefully examining financial reports each month, you can see trends in revenue and expenses, assess overall health, plan for growth and more. This can help you to make adjustments as needed to ensure you have the resources required to ensure your organization can make the most of great opportunities when they present themselves.
Still Have Objections to Reviewing Your Monthly Statements?
Despite the benefits of reviewing your monthly statements, many small business owners may still be hesitant to take the time to do so. Two common objections are lack of time and lack of financial understanding.
If you're concerned about lack of time, it's important to remember that reviewing your monthly statements doesn't have to take a lot of time. In fact, with the right tools and systems in place, you can review your statements quickly and easily. Consider working with a bookkeeper who can help you set up a system for reviewing your statements efficiently.
If you're concerned about a lack of financial understanding, it's important to remember that you don't have to be a financial expert to review your statements effectively. Your bookkeeper can provide you with explanations and context for any items that you're unsure about, and can help you to understand the information presented in the statements. By working collaboratively with a bookkeeper, you can build your financial knowledge over time and feel more confident about reviewing your statements independently.
Reviewing your monthly financial statements is a critical component of effective financial management for small business owners. By taking the time to review your statements regularly, you can ensure that your finances are accurate, make informed business decisions, manage your cash flow effectively, identify negative trends before they become problematic, and seize opportunities for growth. With the right tools and support, reviewing your monthly statements can be a quick and easy process, and can help you to build your financial knowledge and confidence over time.