What You’re Missing If You’re Not Getting Good Monthly Financials

Nick Roell

Mar 12, 2024

Man reviewing monthly financial statements

Many small and mid-size business owners think they are getting the monthly financials they need to make good decisions and maintain a source of transparency into the health of their business. However, there is a lot of misunderstanding around what constitutes “good” monthly financials – along with whether it is necessary to have monthly financials prepared in the first place.

You may have a lot of data, but the picture you’re seeing can be wildly distorted by revenues and expenses not aligning in the same period.

Good Monthly Financials Provide:

An accurate picture of the company’s financial strength
Timely insights for improving cash flow management
Accurate data for comparisons between time periods and tracking KPIs
A solid foundation for forecasting that enables better and more agile decision making
Historical context for recognizing and understanding trends

If revenue and expenses are not accurately accrued, you may have inaccurate monthly financials that are misleading and painting a false sense of profitability. Such distortion is compounded month by month and eventually it can be easy to mistake a poor year for a good year or overlook a shrinking line of business concealed by overall growth.

That’s because unless your business is as straightforward as a retail-based, product-out/revenue-in model, transactions don’t line up in a way that creates a real-time picture of the health of your business. It’s up to you, or your accounting partner, to get them lined up.

Otherwise, the list of things you could be missing is profound.

What Inadequate Monthly Financials Are NOT Telling You

Here’s what you could be missing if you’re not getting the monthly financials you need:

You’re not making as much money as you thought
You’re making money but not where you think you are
You’ve got an opportunity to invest more in a promising line of business
You have a gut feeling about where you should be focusing your efforts, but can’t say for sure if the numbers support your instincts
Parts of your business are lagging
Capital investment opportunities are being missed
Your sales are down, but booked revenues from work you did last year are disguising the true state of your business health
Your productivity or sales have fallen off, but it’s hiding in price increases
You’ve got unprofitable lines of business concealed by cash received for future projects
Early warning signs of a problem that could be turned around if addressed in time
Which growth opportunities are worth pursuing and which should be rejected

The Right Partner for the Financial Insights You Need

Monthly financials that accurately track revenue and expenses in the correct month are a tremendous source of insight for business owners. Relying on basic or inadequate monthly statements and monthly close processes is not much better than looking at last month’s bank statement.

Don’t let underlying issues hide behind statements that don’t provide you with the answers you need. At Kirsch CPA Group, our team of experienced accounting and business advisory experts can help you uncover the insights you need to steer clear of obstacles, take advantage of opportunities, and achieve your business goals.

To learn more about how we can help improve your financial visibility and growth planning, connect with one of our team members today.