Business Tips: How to Maximize the Value of Your Financial Statement
© 2002 Door & Access Systems Publish Date: Summer 2002 Author: Tom Wadsworth Page 44 Business Tips How to Maximize the Value of Your Financial Statement “Just because you have an accountant doesn’t mean you’re getting all the financial information you need,” says Bruce McConnell, a financial consultant to door dealers. “If you’re just using your accountant for tax work, you may want to ask for more detailed financial statements that help you manage your business,” he adds. McConnell has consulted with hundreds of dealers over the past decade. He says it’s common for door dealers to receive regular financial statements from an accountant, but it’s also common for dealers to need statements that provide more useful information. To maximize the value of your accountant’s services and your financial statements, try these suggestions.
- Ask for your financial statements to be broken down so you can see which sales category is generating the most gross profit and the least gross profit. This information can save your business. McConnell: “It can warn you when you need to raise certain prices, push a certain product, or minimize sales of unprofitable ones.”
- Under cost of goods sold, ask to see a breakdown of your materials, freight, and direct labor costs for each sales category. “These items,” says McConnell, “are the key elements that affect your profitability in each sales category. If they’re grouped together, you can’t manage them effectively.”
- Under expenses, ask to see your wages broken down into officers, office, and sales. “Each one of these wage categories performs a different function within your company,” he explains. “You need to see them separately to manage each of them as effectively as possible.” For the same reason, you should also isolate your total vehicle expenses and your bad debts.
- Make sure you also separate your costs for your Yellow Pages ads from your telephone and utilities expenses. “Yellow Pages costs are sometimes lumped in with telephone expenses,” says the consultant, “but your Yellow Pages ad is a part of your advertising budget.”
Similarly, telephone costs and utilities should be separated. “Telephone costs aren’t as fixed as utilities, and they should be managed separately,” he says. “Several key expense items can get out of control,” concludes McConnell. “If you can’t see these numbers, you can’t manage them.” Accountants and financial statements are only as good as the information you give them. Accounting software programs such as Peachtree and QuickBooks can help you keep track of the detailed information needed. Most accountants are willing to help you set up these bookkeeping systems for your business. Giving them some direction can make this process much more beneficial to you and your accountant.