The essential reports you need to view the financial activity, positions and the timing of the amounts of cash coming in and going out of your business are derived from the information and balances recorded in your chart of accounts.
Good businesses know what they should track and measure and why. The detail of what they want to track and measure is reflected in the design of their Chart of Accounts which in turn is a mirror of what is in their Business Plan.
Well managed businesses use business planning to predict what they expect to happen in the future. They always begin this exercise with the end in mind
Good businesses set less than five clear objectives and then think through and decide the best strategies to achieve them.
Strategies are then translated into Activities with dates and priorities which are then communicated and assigned to the individuals or teams for execution.
The plan details assumptions of what sales are forecasted to happen when, what the future financial activity, cash flow and balances are expected to be.
The assumptions in the business plan help you define financial targets each of which has financial implications for a business. So it’s essential you are able to accurately track and measure these critical numbers
Cash provides the oxygen for every business and therefore it’s critical the supply and consumption is carefully managed to keep the business alive and help it grow and flourish.
The underlying financial and supporting information behind the critical numbers has to be accurately recorded and well organised to support effective business management.
This can only be achieved with enduring discipline, a well organised chart of accounts and good small business management software.
Because of the rapid emergence of SaaS systems, small business bookkeeping online is now possible and can give business owners a real time view of progress of their business against their plan.
Every number in the accounts of a business has a story behind it containing events and characters the details of which cannot easily be recorded in an accounting system therefore Small business management software as opposed to accounting software is now an essential part of the foundations of a well run business.
Continued in - Small business management software – The join between planning and accounting – Part 2 of 4
