While each and every business department has a distinct contribution to the success of your company, only one truly holds the purse strings. A business can not properly operate without purchasing its inventory, paying its employees, or collecting payment for its services so it is critical that proper financial management be practiced in each and every company.
The financial management of your company includes areas you would expect - tracking spending, collecting sales, and paying bills. These tasks are essential, but they also lead to other important areas like evaluating the true value of an investment or deciding whether you really will have enough cash to move forward with an exciting new marketing plan. Most companies are expected to track their financial health with financial reports as well as maintain proper records of ongoing financial activity. All of these financial activities are essential to keeping the doors open and increasing the value of your company.
If you ever intend to get a loan from a bank, an investment from a venture capitalist, or sell your entire company for profit, you will need extensive, detailed evidence of your company’s financial state. But more importantly, you will want to maintain accurate financial reporting for your own benefit. It will help you keep tabs on your company, make sure you are on the right track financially, and protect you against costly mistakes or oversights. There are three types of financial reporting that are consistently recognized across all industries: the balance sheet, income statement, and cash flow statement.
Your company’s balance sheet provides a snapshot of your business’ assets, liabilities, and equity. It is called a balance sheet for obvious reasons - everything needs to balance ag ... Sign in to read more