317-670-8781

317-670-8781

frequently asked questions

(Click on the questions below to jump down to the answer.)

  • Why can’t I get timely financial statements?

  • Why can’t I get financial statements that accurately and consistently reflect the financial results of operations?

  • What are my Gross Margins by Product or Line of Products?

  • What is my Customer Profitability?

  • What is EBITDA?

  • What is my Department/Location Profitability?

  • How do I maximize the amount I receive when I sell the Business?

  • Do I have the right accounting Staff?

  • Can I get reporting more frequently (than monthly) so I know how we are doing?

  • Can you provide me with a cash forecast?

Don’t see your question listed here? Fill out our contact form and ask your question or call Dave at 317-670-8781.

Questions & answers

Why can’t I get Timely Financial Statements?

  • Many reasons often cause or compound this The most common:
  • In smaller companies, if there is a degreed accountant, they often where many hats including Payroll, HR and IT. These functions place time demands that ignore the priority of producing timely statements.
  • Accountants and Bookkeepers often lack a Closing Checklist. Checklists ensure steps to close are consistently followed.  It is often helpful for top management to let other departments know that accounting is off limits for a couple of days at month-end to focus on completing the close.

Why can’t I get financial statements that accurately and consistently reflect the financial results of operations?

  • Many processes need to exist to ensure this.
  • Monthly Balance Sheet Reconciliations – A tool that ensures all Balance Sheet Accounts are reconciled monthly to subsidiary balances (Think Bank Statements, Inventory, Accounts Receivable/Payable, Debt Statements).
  • Accrual Accounting – Bookkeepers are often shaky in their understanding of accrual accounting (making sure expenses are recorded in the period they were incurred). This can result in large swings in monthly recorded expenses as one month is understated and the next overstated.  Utilizing checklist and reconciliations to ensure all incurred expenses are recorded or accrued in the proper period helps eliminate this.
  • Comparative Reporting – Unless results are compared to Prior Periods or Budgets, it can be difficult to spot errors. Producing and analyzing such comparative reports as part of the closing process not only eliminates errors but can also provide meaning analysis for decision making and/or corrective actions.

What are my Gross Margins by Product or Line of Products?

  • Often, inventory ITEMS have not been set up correctly in the master files of legacy software used. Many parameters must be set up correctly to permit this critical reporting.  Including Costing, Accounts used, Stock vs. Non-Stock flags, Mark-ups, and Price Tables.  Once these are established, meaningful reporting becomes available.  Often this can be further Categorized by Department and Salesmen.
  • In Manufacturing and Service Industries, it is often necessary to allocate Overhead to apply to Labor Cost based on Machine or Labor Ours. While these allocations are reported on monthly, they are typically only changed annually or semi-annually.

What is my Customer Profitability?

  • Gaining Customer Profitability generally only requires filtering Gross Margin reporting by Customer Names.

What is my Department/Location Profitability?

  • Just like allocating Overhead for Gross Margin Reporting, it is useful to allocate Corporate/Headquarter costs using a model that considers such factors as Direct and Indirect Labor Costs and Sales.

What is EBITDA?

  • This stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.
  • This is very important when obtaining Bank Financing as they want to know how much cash the business is generating to make principal and interest payments. It represents Cash generated from operations.  The interest and Taxes each business pays are based on their unique Business type, Ownership, and Debt so these are excluded.  Depreciation and Amortization help estimate the cost of assets being used up, but they don’t represent cash payments.

How do I maximize the amount I receive when I sell the Business?

  • This is a great question. It is even greater when I am asked this at least five years before the sales process.  Why?  Because the answers require time, focus, effort, and resources.
  • Accurate, Comparative Historical Financial Statements for three and preferably five years. If you don’t spend the time and money throughout the years, you will have to go through the pain (all at once) with as much or more cost to get them.  You won’t have benefited from the information they contain, and they may be less accurate due to going back in time.
  • Maximize Profitable Sales Growth with signed Contracts. Think about it, what is a buyer paying for?  A future stream of profit.  The more certain, the less discounting applied.
  • Maximize Operating Profit. So much goes into this.  In a nutshell, you need meaningful measurements – accountability through tools like dashboards, Results Owners, Budgets and you need to use them consistently.  I can help with all of these and the monitoring process.

Do I have the right accounting staff?

  • Small companies often require a bookkeeper/accountant that has a diverse set of skills because they wear a lot of hats throughout the month and year. It is often cost effective to have such a resource in place and layer in advanced reporting/project skills monthly, Quarterly, and annually as needed.  I can assist by equipping current staff with tools, resources and training to ensure they use their time efficiently and effectively and even increase the analysis they regularly provide Operations and Management.

Can I get reporting more frequently (than monthly) so I know how we are doing?

  • While this question gets asked in many ways, the solution is the same.
  • Dashboards/Metrics/Scorecards – It is VERY common that companies have multiple software programs that manage the operations of the company. In addition to accounting software, there may be separate software to run Production/Manufacturing/Service Functions that either does not interface directly with Accounting Software or in enough detail to provide meaningful analysis by products or Customers.
  • Excel is a familiar tool for most companies and accountants. Advance analysis from different data bases is not readily available through Power Pivot and Data Modeling.  I am skilled and creating reporting from multiple data sources and setting up the process to ensure data flowing in is scrubbed and accurate.  These models can often be turned over to staff for daily maintenance.

Can you provide me with a cash forecast?

  • Excel is an excellent tool to use for this.  Once a model is built it can typically be turned over to staff to maintain and publish.

Have a question that wasn’t answered here? Fill out the contact form below and ask your question.

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contact dave 

Can I get you on a path to financial health? Contact me to set up a free 2-hour assessment so I can hear more about your needs. Use the contact form below or call 317-670-8781.