Sexy?
Consider the following scenario:
Your business is running okay. Some months are not so good and some are better. You now wish to expand the operation and need some finance to do so. When you ask the accountants (or whomever is) to prepare them, the picture does not look good. This is often the case.
You sit down and rethink the numbers and some adjustments are made. The Annual Financial Statements are now favourable to your application for finance. You are approved for finance and it’s all steam ahead to expand your business.
A real picture?
The above scenario is all too often seen and it is not good practice in business. There are several reasons for this.
- The ‘not so good picture’ can be warning bells for you and your business. These warning bells are why businesses do not get finance. There may be a trend that you are not aware of. This trend may be the end of your business. It may however be a positive trend upwards. Finance houses take a cautious view so will probably overlook a possibility of this.
- The ‘sexy’ Annual Financial Statements are not an accurate, complete and true reflection of your business. This is NEVER a good business practise for both you and the preparer of the Annual Financial Statements. This may lead to legal and possibly even criminal charges.
Solution?
- Prepare your Annual Financial Statements to reflect a true, accurate and completion reflection of your business.
- Accept that this may well result in declined credit applications.
- Make changes in your business so that going forward the Annual Financial Statements look ‘sexy’ on the outside and the inside. These do not always have to cost extra money.
- Ensure that you receive the monthly figures from your business and learn to read and use them. Make you receive them IN TIME to make change if needed OR keep going with a certain action.