Management
 

How can SUM Bookkeeping & Office Services help you with your bookkeeping requirements?

Small Business relies on a number of resources to help them administer their office and bookkeeping services.  Services your business may be looking for include:

Consultation

SUM Bookkeeping & Office Services will take the time needed to discuss how to understand the financial information as presented by your business records and activates.

Account Reconciliations

Account reconciliation is a process of verifying records from one source to another source to ensure accuracy and completeness. Reconciliations, especially bank and credit card reconciliations are the best way to find errors or omissions and discover theft or fraud. They should be done monthly to make sure discovery and corrective action are prompt.

Having us reconcile your accounts each month may alert you to…

  • lost cheques, deposits and unauthorized wire transactions
  • errors, theft or fraud within that account
  • excess/unjustified bank service and/or interest charges
  • cash flow issues that may affect normal operations
  • errors in accounts receivable and/or accounts payable

Monthly account reconciliations keep information up to date and strengthen the reliability and accuracy of the numbers so you can be confident in the information.

Management Reports

Management Reports are internally prepared financial summaries and reports. Management Reports are not Financial Statements (prepared annually for most small businesses) and should not be used outside your business without a Notice to Reader, clarifying that they are internally prepared documents.

Management Reports are very valuable to the business owner and should assist you in analyzing your business at any point in time. When used consistently, Management Reports help you identify and analyze trends within your company so you can determine whether or not you are on the right track.

You will know:

  • if you are doing better than the previous month, quarter or year
  • if your company has improved, remained stable, or declined
  • whether to make adjustments to your plan or stay the course
  • if you have to start putting money aside to improve your working capital or meet tax obligations

Should your Management Reports not provide this information, you should consider doing a full review of your bookkeeping processes as there are likely errors and omissions not being correctly recording.  Many of these transactions are beyond the skillsets of staff you have doing the day-to-day data entry.

Income Statements

One of the most important Management Reports you will use on a regular basis is the Income Statement, also known as a Profit & Loss Statement.  This report calculates the profitability (net income/loss) of a business over a specified period of time by subtracting expenses from revenues.

An Income Statement allows you to:

  • identify areas in your company that need improvement (i.e.: warranty costs, cost of goods sold) and/or areas that are doing well (i.e.: certain products/services that are selling well)
  • compare actual to budgeted amounts
  • determine unexpected expenditures (i.e.: maintenance costs)
  • determine the efficiency of your operations and track your profit margins
  • determine your tax liability
  • calculate your *net income for the period

*Net income is a calculated number, and how a business’ transactions are recorded greatly impacts this number.

Balance Sheet

Another very important Management Report is the Balance Sheet.  This report gives you a snapshot of business’ financial condition as of a specific moment in time. It reports on the assets, liabilities and equity of your business.

A balance sheet helps you…

  • Determine the financial strength of your business. (Are you are able to meet your current obligations such as paying bills, payroll run, loan payments, and government remittances on time?)
  • Determine if your internal processes are working for you or if you have to make changes. (Is your accounts receivable collection period getting longer? Can you handle the normal ebbs and flows of revenues and expenses?)
  • Qualify for better credit or loan terms saving you money
  • Determine if taking advantage of a sudden opportunity is the right move

Statement of Cash Flows

A statement of cash flow reports the actual flow of cash through the company during a specified time period. It divides the cash into 3 distinct areas: cash flow from operations, investments and financing. It removes the non-cash items and their effects on net income and shows you where your money is coming from and going.
When used in conjunction with the balance sheet and income statement, a statement of cash flow helps you…

  • Determine the quality of net income reported on the financial statement. (You are generating real cash, not accounting profit as the income statement calculates.)
  • Determine the actual cash position of the company to make decisions regarding expanding, investing in new projects and/or making dividend payments to shareholders
  • determine how much money you can put to work for you without affecting normal operations
  • know that your company is generating cash from its normal business rather than investing and financing options

General Ledger

The general ledger is the core of your company’s financial records. It is the foundation upon which all your financial information is derived. Inaccurate and incomplete postings will transfer to the financial statements and other reports used to run and make decisions about your business. Poor data results in inaccurate information and bad decisions. If you make enough bad decisions your business will ultimately fail.

Having us review your general ledger each month allows us to find discrepancies, errors and omissions. This will ensure your general ledger is always accurate and up to date to give you the right information, at the right time for the right decision.