Strange as it may seem interpreting accounts is a problem also faced by Accountants. If you’re applying for a small business loan you can be certain that your Bank Manager or Business Manager will want to see your accounts, cash flow statements budgets statements and even your business plan. But how can they interpret them, especially if the results cover three, four or five years?

If you rely on an Accountant to prepare your accounts, VAT returns and management accounts chances are he doesn’t prepare a report that analyses the performance of the business. Let’s be real, how can you manage your business if you are missing the most important tool of all, "analysis of how your business has utilised resources (fixed and liquid) in adding real, bottom line value."

As an Accountant, I must concede that when I was studying for my exams, "interpretation of accounts" was given just two lessons and exam questions tend to crop up in the earlier papers.

"No wonder this is an area that Accountants pay little attention to!"

"Cash is king", it’s the lifeblood, the oil that flows and "greases" the wheels that turn effort and fixed resource into bottom line profit. That’s why a cashflow statement is the most useful tool to a small business entrepreneur.

Consider what it would mean for your business if you could see the impact on liquidity, profitability and efficiency of every transaction your business processed ... a tool that you could bolt onto your accounting software, just like the cockpit of an airplane that gives signaling messages to a pilot.

Instead of the Bank Manager struggling to interpret your results you can help him by giving him the information he’s looking for. Better than that, you can explain your results that impart confidence in your ability to manage your business.

If your business could benefit from such a tool you won’t have to wait too long. Continue to watch this space for major announcement in this area.

David
Small Business Resource