Who controls your financials?
Chapter 2 – Financial Control – Rule your money
This is part of the ‘How to’ coaching series. An ongoing series of activities to make your business successful. Follow it step by step and see positive results as you develop a robust business model, set on a solid foundation.
Activity 42 – I regularly review my P&L position … daily weekly monthly
So you know your Profit and Loss (P&L) situation from the accounts your accountant gave you for your last trading year. Now you know how well you did?!?
Well, know how well you did for a specific point last year. What about how well you’re doing against your targets this year?
I find many Small (and some not so small) companies that do not know what’s going on this year, let alone this month, week or day.
If you want to be in charge of your financials rather than try to operate on last year’s figures, you need to have a regular review process in place.
It’s not difficult, it just needs discipline to keep doing it.
The reason why it’s helpful to know your P&L position is that you can use the data in a timely manner to decide if you are on track or need to make changes to how your business is operating.
The HowTo bit:
First thing is to work out a schedule for reviewing your P&L. This depends on the size and speed of your business. For most companies, a monthly detailed review should work well; and not be too burdensome. A daily or weekly review of the high level numbers, especially when making a good number of transactions a day, will keep you aware of what is happening and highlight where changes/corrections/amendments are required.
If you have the tools, set up an automatic reporting system, showing detailed sales, detailed cost of goods sold, gross profit, detailed operating costs and net profit… before interest and tax. This can be done manually, just takes a bit more effort.
The key is to run the process at the same points in the monthly business cycle to see what is happening with your business. This will then be used to drive change or continuation of your current business processes.
If you would like further information on how to set up your P&L review process, Contact Us…
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