Learning the benefits of financial statements are similar to learning the benefits of diet, a sports team, or an investment. A financial statement is basically all the relevant information on a business contained in a few pages that can give the reader a simple snapshot of the company’s past, present, and estimated future. So if your’e wondering whether or not a financial statement is right for your business, check out these reasons below to have them done.
1. Information
If your business numbers just aren’t adding up, or at least aren’t adding up the way you want them to, a financial statement can be beneficial. This is due to its ability to show owners and operators where the money is coming from, where it is going, and allow them to make informed decisions in the future. We can’t tell you how many times a client will come in, ask what they are doing wrong, but fail to produce any hard data on their finances.
2. Impartial Opinion
We love shows like “Hotel Hell” and “Restaurant Impossible.” The chefs are different, but the premise is the same. Clueless restaurant owners have no idea why their business is failing and is on the brink of filing for bankruptcy. These Michelin Star Chefs will then come in, try the food, and do a number of other examinations of the restaurant. This is similar to what a financial statement does. Not only does it give facts and figures, but if you’ve hired someone knowledgable, they can tell you what to fix much like a clueless restaurant owner who overcharges for an item that was frozen and deep fried.
3. Credit Benefits of Financial Statements
A small business will often need to apply for a line or two of credit as a part of a strategy to maintain financial viability. This includes filing an application for a business loan, credit cards, and even a credit term with one of their vendors. In mostly every scenario, the lender of the funds is going to ask to run your credit report and see a recent financial statement in order to decide to issue the credit. Financial statements show creditors how much debt you carry and how much income is flowing into your business.
4. To Get Investors
Whether you are or are not considering going pubic with your company, chances are you will need some form of investment. Whether it comes from family, friends, colleagues, or even investors, most or all of them will want to see a financial statement so they can know what they are getting into. In fact, your most cherished family member or business associate will terminate the discussion of investment in your business if you do not or will not produce a recent and valid financial statement.
5. To Get Donations
And the above doesn’t just go for businesses for profit. Non-profit organizations must also produce financial statements on a regular basis. This is especially true if they intend to collect any kind of donations that don’t include a street corner, sign, and bucket. Big dollar donors have a huge stake in knowing that their donation will be used responsibly, especially in the case of foundations, corporations, and wealthy individuals. In fact, many worthwhile charities take the time to post their financial statements online so that anyone can see how well they manage their funds.
Benefits of Financial Statements in Houston
And if you would like to know the benefits of financial statements for your business located in Houston, please contact us.
