Let’s suppose that today is Friday, and it’s Pay Day for your staff.
They’re very excited and can’t wait to cash their checks and play over the weekend. You’ve processed payroll. The time is now 4:00 pm and you distribute the checks.
Then you receive a phone call from your local bank where you’ve done business for over 10 years. The bank informs you that there are not sufficient funds in your bank account to cash the checks that your staff is presenting to the teller. You’re baffled and can’t believe that this is happening.
You were sure that there was enough money.
You begin to pick through your financial paperwork. You notice several deposits have been accounted for more than once which lead you to assume that funds were abundant. You log into your bank account and confirm what the bank has said to you. And the business savings account? Already depleted to cover other expenses.
You need financial assistance, immediately. The bank apologizes for not being able to assist you in any manner. Your staff is red hot.
Advice from the last year is now haunting you. Your CPA advised you to update your accounting workflow and tasks. You didn’t take the advice. Now you’re paying the price of not knowing that your main street business was heading for financial trouble. Your head is pounding.
The cost of unhealthy numbers has challenged you to manage your main street business in a new way.
You resolve to run your business differently.
You resolve to be in the know.
You resolve to have the numbers resonate.
Cash flow. That’s the first issue to wrangle. Reinvestment in the business from your personal savings is a must, no matter the pain. Take care of your staff and suppliers so that you can open the doors come Monday morning. The essence of Cash Flow Statements resonates deeply within you. It’s necessary to check, and sometimes double check, the financial needs for operational expenses, as well as capital outlays with associated financing. Will there be enough money coming in to fund what needs to be paid out? Are there outstanding Accounts Receivables to collect?
Get real with the Income Statement. It’s time to take a hard look at the revenue and expenses generated by the company’s activity. Is the business making a profit?
The Balance Sheet states the company’s assets, liabilities, and equity. If there is a profit, is it sufficient to fund any investment and financing needs? If cash flow is an issue in the future, how will the funding be met?
Your main street business is your passion. Don’t let your passion be catapulted toward financial catastrophe due to unhealthy numbers.
Let the numbers resonate with truth.