Blog: F is for Financials

Whether your goal is the sale of your business, working with a financing partner, or simply growing your business income, having rigorous financials that paint a clear picture is critical.  Though many other things can be important in these pursuits, maintaining a healthy P&L and (often) a strong balance sheet should be top priorities for almost every owner.

Put simply, keeping accurate financial records makes it easier for you and any outside parties to quickly assess the financial health and profitability of the business.  The ability to confidently rely on and analyze your P&L will aid in identifying areas for growth or optimization.  By the same token, an accurate and up-to-date balance sheet will enable you or your bank to quickly determine the company’s ability to borrow money and repay debt.  Having clear and accurate financial records provides the necessary transparency that allows for informed decision-making before money goes out the door.

Well-maintained financial records also make for a smoother due diligence process for buyers or banking partners, both of which will need to scrutinize the company’s past performance and future earning potential. By contrast, messy or incomplete records can raise red flags and create concerns about the business outlook.  In these kinds of situations, having clean books saves time and reduces stress – goals that are probably near the top of any business owner’s wish list.

Of course, accounting isn’t a fun or exciting topic to most, and careful bookkeeping can be complex.  But for an owner, the cost of sloppiness is simply too high, and has real costs, whether through lower profits, higher borrowing costs, or a lower sale price for your business.  Investing in good bookkeeping to have clean, organized financial records helps build trust in your business, streamlines borrowing and selling processes, and showcases the company in its best light.  And ultimately, that will mean a stronger operation and more money in your pocket.  Now there’s two priorities every owner can get behind.