Learn how to leverage financial reporting to drive profits and overcome cash flow obstacles.

Cash is not profit, and profit is not cash.  You need both to sustain and grow a business through the five stages of business evolution.

Most businesses never make it out of the Survival Stage because they never master how to use the power of accurate + timely financial reporting.  What results is a never-ending struggle to hold onto cash because they never learn how to work with the actionable information available from their financial statements.

Business owners in the Stuck Stage who become good at using their business reporting to help them make smart decisions move into either the Stable or Stretch Stage, and even the Substantial business stage because they act decisively on the insights they derive from their business reporting.

Businesses move from Survival into the Stable Stage because their managers begin to master how to use their financial statements to better ensure their businesses always have cash on hand.  As their ability to control cash improves, their use of financial reports expands, leading them to earn higher profits.

Your ability to produce profits and hold onto cash is grounded in useful financial statements.

Your financial reports are built from the data collected from each business transaction you conduct.  Every financial report represents different roll-ups of each transaction.  Each recorded business transaction either represents cash in from the sale of something or cash out spent on producing that sale or supporting the business.

One of the primary reasons why most business owners struggle with holding onto cash is that they are inconsistent in recording their business transactions into their accounting software.  As a result, the information they need from their financial statements to forecast their cash position or stop their profit losses is never wholly accurate nor utilized in the decisions they need to make.

Failing to report each financial transaction accurately contributes significantly to businesses with cash flow and profitability problems.  Over time, failure to convert the financial data produced through each transaction a business conducts every day of every week throughout the financial year into useful information robs business owners of critical insights.  And it blinds them to useful actions that could be taken to improve the results of their business.

Why should I care about my financial reporting?

Accurate and timely financial reporting provides actionable information for critical decision-making.  Your financial statements report the results of your operations, your financial position, and the cash flowing through your business.  This information can help you to make financial-statement-informed decisions regarding the best allocation of resources across your business operations.

Too many small business owners remain small because they don’t make an effort to understand the purpose and importance of the information reported in their financial statements.  This lack of interest dramatically increases their risk of going out of business.

How is a business cash flow statement different from a P&L Statement or Balance Sheet?

Many accountants play to the illusion that financial statements are difficult to comprehend to make you codependent on them.  The reality is that there are only three financial statements you need to understand to operate any business by the numbers:

	P&L (Income) Statement	Balance Sheet	Statement of Cash Flows
Definition	A summary of management’s performance as reflected in the business’s profitability (or lack of it) over a defined period, irrespective of cash flow.	States (1) what assets the company owns, (2) what it owes (its liabilities), and (3) what is the amount left to the owners after satisfying the liabilities.	A summary of the actual incomings and outgoings of cash over an accounting period (month, quarter, year). It answers the questions: Where the money came from? Where it went?
Key Fact	Net income is the owners’ return from operations and represents an increase in the value of their investment in the business.	Owners’ equity is not the owner’s piggy bank; it represents the owners’ claim on the company assets AFTER the liabilities have all been paid off.	Operating cash flow can be used to make new investments in the business, repay financial debt, or to return capital to the owners.
Formula	Sales – Expenses = Net Income	Assets = Liabilities + Owners Equity	Operating + Investing + Financing Cash
Core Components	Gross Sales –   Sales Tax –   Sales Discounts –   Sales Returns –   Sales Write-off’s = Net Sales –   Cost of Goods Sold =Gross Profit –   Selling, General & Admin Expenses = Operating Income –   Interest Expense –   Tax Expense –   Depreciation Expense –   Amortization Expense + Non-Operating Income –   Non-Operating Expense = Net Income	Assets +      Petty Cash +      Checking +      Savings +      Accounts Receivable +      Inventory +      Other Current Assets +      Property +      Vehicles +      Equipment +      Machinery +      Intangible Assets +      Other Fixed Assets –   Accumulated Depreciation –   Accumulated Amortization = Total Assets Liabilities ·      Accounts Payable ·      Credit Cards ·      Line of Credit ·      Short-term Financing ·      Taxes Payable ·      Other Current Liabilities ·      Long-term Financing ·      Long-Term Notes ·      Other Long-term Liabilities = Total Liabilities Equity +      Opening Balance +      Paid-In-Capital –     Distributions +/-  Net Income +/-  Retained Earnings	Net income +/- Adjustments to reconcile Net Income to Net Cash Provided by Operations = Net cash provided by operating activities   +/- Investing Activities = Net cash provided by investing activities   +/- Financing Activities = Net cash provided by financing activities   = Net cash increase or decrease for the period

Use your P&L Statement to measure the profitability of your business operations, your Balance Sheet to confirm who owns your business assets, and your Statement of Cash Flows to summarize your sources and uses of cash.  Below is the flow of money reflected by your business transactions from a business operations perspective:

You need more than your bank statement to manage your cash profitably.

Failing to consistently use readily available financial reports on a timely basis will result in a business without cash.  You protect your business from running out of cash by using the financial data produced through each business transaction.

Your best view of what happens across your business every day throughout the year is seen through your financial statements, not your bank statement.  Your business transactions entered into your accounting system shows you how your business is performing.  Use your business transaction information rollup to identify where corrective action is needed to improve your profit results.

Every business has to manage both cash and profits effectively. To WIN in business, you need both positive operating cash flows and sustainable profits.  By consistently using financial reports, business owners and management teams know what is working well and what isn’t.  Disciplined use of your internal reporting system is how you intelligently decide what actions to start, stop, or change in your business.

Are your financial statements accurate?

If you struggle with understanding your financial statements or question their accuracy, click here for a “free” assessment of your financial statements from a certified BusinessCPR™ Business Scientist who will review them and share back with you what your financial statements reveal about your business profit and cash position.

Within one day of receipt of your financial statements, you will receive back by email your free financial statement review.