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What to do:
Alter standard bookkeeping practices
I am advocating that small and medium businesses (SME’s) alter their standard bookkeeping practices to avoid losing the first month of every calendar year. If they plan to seek either debt or equity, they should be ready to present to the market in January and be in the front of the line.
The best option for small and medium businesses is to reconcile and review the financial records monthly.
When financial results are reviewed monthly and results are compared with the previous quarter and the previous year, management can made decisions in a more timely manner and be prepared to discuss loan requests with lenders or investors in January rather than in February. And, the funding raising process will be faster because the required information is available at the time the meeting is scheduled.
Year-end financials can be provided in early January.
Another management option is to start reviewing financials after the third quarter reports are finalized. Year end results can be projected based on contracts and prospects.
An accountant can ready prepare cash flow projections based on 9 months of operation and other historical data.
Discussions with the appropriate parties can commence during the last quarter of the year. Supporting year-end financials can be provided in early January.
Good financial management equals business success
Good financial management is vital to small business success. The money people know it and will therefore be more responsive to funding requirements when they see that management has full comprehension of all aspects of the financials reports.
A qualified accountant can provide a perspective and an evaluation that is important to determining what the best course of action is for the upcoming year, but management must be the spokesman for the company.