Recently in one of our workshops, an internal bookkeeper asked us: “How do I communicate to the owner the importance of these financial numbers? How do I effectively share this information with them?” She also shared how difficult it was to get the owner to understand them when it came to revising financial statements.
This specific client sold used cars. I shared with her an end-of-month sample of their “scorecard” to summarize for the owner.
Cash in the Bank – $45,000
Accounts Receivable – $X up $9,000
Inventory – $X up $30,000
Accounts Payable – $X down $10,000
Equipment – $X up $12,500
Notes Payable – $X down $10,000
From these critical numbers, they know where the cash, A/R, inventory, and A/P levels are, as well as cash used to pay down notes and purchase equipment. While there are more numbers than this to review, you can streamline this conversation if you know your overhead and future inventory needs. Then, you can notice where cash in the bank is by observing normal ranges.
If something sticks out as incorrect to you, you can share where things are off-target on the report. You can highlight these key numbers on the financial statement in yellow, so they know instantly where to look without getting lost. Then, if they want to know something further, they can ask for clarification or have someone investigate it. This provides the owner with the essential information they need to make decisions and move forward. It allows them to have a pulse on the most important numbers while you help with the underlying details.
To use a real-life example, an NBA owner spoke about how he would put investment information together for all the owners. He shared that when it came to what information to share, he would get it down to a one-page summary. While numbers are complex, they are not infinitely complex. At the end of the decision-making funnel, decisions are based on a few key reasons, numbers, and the bottom line.
Making sure you have solid financial information and timely financial statements is key to putting any summary or KPI dashboard together. Contact us for more insight on how to share financial information with your business’ owner, or to understand what financial information you should be receiving!
To learn more regarding this, claim your free online course. Cash Flow Essentials or any of our Numbers Skill Sessions will give you more insight into how to increase cash flow. Use coupon code ROCKNROLL to claim your first course for free now!
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