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Effective Communication with Financial Statements – american funeral financial

american funeral financial
With  businesses trying to thrive to maximize profit margins, the role of accountants and financial...

With  businesses trying to thrive to maximize profit margins, the role of accountants and financial statements are becoming increasingly vital. Business owners are not always sure why it is so important that they communicate with their accountants on services both used and offered.


Proper Use of Financial Statements


The elementary thing that business owners have to do is determine who uses the financial statements and how confident they are in their staff putting together the statements. How much do they want someone to oversee or test the numbers and information being put together? We have some clients who request us to do an audit, examining supporting documentation for various transactions, physically observing inventory and observing pricing. Even though they don’t need it for outside use, they want to feel comfortable going to sleep at night knowing that their numbers are good numbers and insuring user friendly financial statements.


Financial Statement Options


A lot of times, clients don’t understand their options. The best thing a business owner can do is talk to their CPA and say, ‘What do I need? Are there requirements? What are the different levels of service?’ A review consists of limited procedures and provides limited assurance on the financial statements being presented. An audit includes auditing the systems, obtaining evidence for documentation and a number of transactions, testing the client’s systems to make sure they’re being applied appropriately, and providing positive assurance on the financial statements being presented.


Lending and Financial Statements


Lenders look at various key items, including the entity’s ability to generate cash from operations. Some will look at working capital or debt-to-equity ratios. A lot of outside parties like to see a lot of cash. By delaying paying some bills at the end of the year and paying them on Jan. 1 or 2 instead, businesses can show more cash at the end of the year. If they have some lines of credit or current borrowings, you can often get the banks to set an expiration date on the line of credit greater than a year from the financial statement date, so it shows as a long-term liability and not a current liability. Sometimes just changing the presentation of an item makes financial statements look better to an outside user that is considering investing in the company.


Proper Inventory Management Can Help


Make sure you’re including all indirect costs of producing items in inventory costs, which will shift some of the cost to the balance sheet and improve the income by increasing inventory amounts on financial statements. In summary, a good CPA can help clients pay for only what they need or help them negotiate with lenders to reduce their requirements. In addition, some simple changes in financial statement presentations can dramatically alter the way users of the information look at the company.



Carlos Hank Rhon User Friendly Financial Reports  – american funeral financial

It goes almost without saying that the financial reporting of a business is of key importance to those who use such reports in the process of their decision making; most business people understand just how much rests on the assessing of such reports, anything from whether or not they get a bank loan, or bag a large investor, to how much tax they pay at the end of the year, so, taking their importance as a given, are there ways to make the financial reports your business produces work better for you? How can these vital annual and financial reports be improved to make them more user-friendly and therefore pleasing to the end user?



There will almost certainly be parts of the information you give that you have had to estimate; obviously you cannot ever be one hundred percent accurate with financial predictions, but the information still needs to be provided, in these situations it serves everyone well to provide conservative estimates; guard well against over-optimism in figures that are yet to be seen.



Although there will without doubt be someone for whom you are producing a particular financial report, who they are can differ widely; it is important when putting your information together to remember who will eventually read it, because there may be a chasm of difference between how, for instance, an accountant views financial information and how a potential investor might. It is worth bearing in mind that not all of your readers will have the same skill-sets or experience.



It matters not at all who is going to be using the information you provide when it comes to being honest about the facts; whoever reads your report needs to be able to trust that everything they see is completely candid and not fudged or polished or padded in any way; apart from the obvious problems reporting in this way could bring, you cannot rely on the right decision being made if the decision is based on erroneous info. End users want to view your financial report to determine your profitability.



Keeping what a report says on track and applicable to the reason for producing it is pretty vital; there are of course many types of financial reports and not all concern the same area of your business’ finances. One of those most important factors in financial reporting is accurate record keeping. Try to focus on exactly what the report is aiming to say and steer away from extraneous or irrelevant stuff that could get in the way of the heart of the matter.



Your reports will not exist alone in a vacuum; each time that your business produces a financial report it joins all of those that have been produced before and will be produced in the future, not just by your company, but by every other business in existence. Professionals whose job it is to utilize financial reports will sometimes need to compare the current reports with your business’ historical reports and perhaps also with those of other firms; to do this there needs to be a certain uniformity about how the information is presented and a consistency to what is included.


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