Understanding the 3 major financial statements Pt 2 – Presenting The Big Picture

In part one, I gave an overview of the 3 major financial statements, what they are and their function.  I defined the balance sheet as the “what?” statement, detailing what you own (assets), what you owe (liabilities), and what your equity is.  I defined the income statement/profit and loss as the “how much?” statement, showing how much you made over a particular period minus expenses, which gives you your net profit over that period.  And lastly, I defined the statement of cash flows as the “where?” statement, showing where your money came from and where it went over a period of time.  Of course all of these statements on their own are extremely important, but their importance is truly felt in how they are used together.  These statements should not only be used to keep score on the finances of a business, but the information in these statements should be understood, analyzed and interpreted, and the information must be used effectively by the business owner to make your business more profitable.  This is where the value of the 21st century bookkeeping professional shines through.

It goes without saying that entrepreneurs tend to lead very busy lifestyles.  In the middle of the hustle and bustle of attempting to turn your business into the powerhouse brand of your dreams, it can be quite easy to forget to see the bigger picture, sit with the cold hard numbers and make intelligent decisions based on your analysis.  Your financial statements are without a doubt the greatest tools to do this, and since us as the bookkeeper are tasked with the responsibility of drafting these statements, it is also imperative for us to develop the analytical ability to become a true asset to our clients through these statements.  It is what separates us from the “bean counter” stereotype of the bookkeepers and accountants of yesteryear, into the 21st century bookkeeping professional who becomes an indispensable asset to whomever they are working with.  This is what we refer to when we at Heru Bookkeeping speak of providing maximum value.

While bookkeeping is extremely important and necessary for any serious business, simply keeping the books in and of itself will not make your business more profitable.  It’s the proactive guidance that comes from the analysis of the information provided by your financial statements drafted by your bookkeeper, as well as the client taking heed to the information and adjusting accordingly, that will really move the needle on your profitability.  It’s easy for a business who doesn’t keep a keen eye on their expenses and liabilities in comparison to their income and assets to dig themselves into a hole.  But with proactive guidance, this is far less likely, and with the business owner listening to the proactive guidance, staying on top of and taking heed to the data provided by these statements while adjusting their practices accordingly, it’s virtually impossible

At Heru Bookkeeping, we make it a monthly standard practice to not only present you with the previous months financial statements, but to also go over these statements with you and analyze them to determine the overall financial picture of your business within the first 10-15 days of the following month.  We will examine how much you have made for that time period, how much you’ve spent, what you spent your resources on, what services or products that you offer that are the most profitable, what you owe, who owes you, etc.  This proactive guidance is guaranteed to make a huge difference that you can not only see in the numbers, but most importantly in your bank account and in your pockets.

If you want to take advantage of the proactive guidance as well as the thorough and accurate bookkeeping provided by the professionals at Heru Bookkeeping, contact me at herubookkeeping@gmail.com or give me a call or text at (267) 314-7223 and book a free consultation.  I can guarantee that you absolutely will not regret it and will see the difference in your business!  Let us make your business our priority and serve you!

Terrence Satchell

Heru Bookkeeping LLC

Published by Terrence Satchell

I am an bookkeeper, entrepreneur, music connoisseur, beatmaker/instrumental artist and writer out of Philadelphia, PA.

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