“Even if you have an accountant, as a small-business owner you still need to be knee-deep in financials.Even if you’re not a CFO—or a numbers person—you should still review your company’s financial reports every month. When you’re reviewing, you need to look for profitability by project, overall profitability and trends, proper classification of revenue and expenses, cash flow and fraud—but that’s just an overview. Here’s what you need to do, step by step.
1. Make sure you have the systems and process in place to create solid monthly financial reports.
Make sure your accounting system is set up properly. This needs to be done before you can start your review. I set up my system so that you can track profitability by project. In some systems, this is called “classes,” where revenue and directly-related expenses tied to a particular project are put into its respective class. For example, my company may produce an email newsletter, a magazine and an event for one client. Each of those projects will be a separate class.