Financial Statements are Gold Mines

February 8, 2012

Financial Statements are Gold Mines

Financial Statements are Gold Mines

by Phil Symchych

Phil Symchych is a member of the Private Roster Mentor Program Hall of Fame, a Master Mentor, and a graduate of the Million Dollar Consulting® College.

There is gold sitting in your financial statements. The trick is to mine it and turn it into cash. Every month!

I advise business owners to sit down with their internal accountants and go through their entire financial statements—that’s the balance sheet, income statement, aged accounts receivable and aged accounts payable—line-by-line, every month.

First, this will force your accountant to explain the statements to you, the owner. You can ask the accountant questions, and, they probably won’t have all of the answers. That’s because they make certain assumptions. Ironically, you have the answers and, together, you can make sense of the financial statements.

Second, this will force you to explain transactions to your accountant. It’s amazing how discussing and thinking out loud can clarify what is going on for both of you.

Third, the review of accounts receivable will identify which customers need to be called or jobs need to get wrapped up so that the customer will pay. That will generate quick cash.

Fourth, reviewing the accounts payable will show which suppliers are treating you well and need to be paid quickly (hint, all of them) and also if there are any unresolved issues that need to be discussed.

There is lots of gold in your financial statements. You just need to sit down with your accountant, mine it, and turn it into cash. Every month!

Did I mention the :every month” part? By staying on top of your financial statements, you will maximize your cash flow and prevent small problems from growing into large problems. You will also be utilizing your accountant more effectively. They’re not just data clerks, they’re gold miners.

Well, what are you waiting for? It’s the middle of the month. Don’t you have your financial statements yet?

Phil Symchych CA, MBA is the president of Symco & Co. Management Consultants and they specialize in accelerating profitable growth for small and medium businesses around the world.www.symcoandco.com