Three Keys to Financial Reports for Business Owners

I often read articles that point to characteristics that help some be better equipped to own a business than others.  I work with enough business owners to know that people with all different types of strengths can succeed.  However, no matter the skill set, there are two traits all business owners seek – answers and assurance. 

To be a business owner, you have to be willing to make decisions without all of the facts.  Never the less, business owners crave information and answers from their team.  They are always looking to make decisions with the least downsides and highest potential. 

Accountants, bookkeepers, and out-sourced CFOs are in unique positions to provide business owners with answers and assurance.  Many solutions that owners seek can be provided through financial reporting and analytics. 

In most cases, however, business owners say they are not getting the answers they need.  A recent study conducted by Intuit found that 40% of small business owners consider themselves to be financially illiterate. At the same time, 81% of them are doing their business’ finances themselves.

If we assume that the 40% of owners that consider themselves to be financially literate are all doing their books (they aren’t..), that would mean 41% of entrepreneurs are doing their books but don’t know what they are doing.  That would further mean 19% of business owners are paying someone to do their books, and still don’t understand their finances. 

The University of South Florida did a study in 2014, finding that 50% of business owners didn’t review their financial statements every month.  Of those, 86% said they were experiencing financial difficulties. 

Even businesses that are getting financial statements regularly don’t tend to review them.  From conversations I have had with new clients, I know that most don’t look at the financial statements provided by their bookkeepers (which is one of many reasons I review statements with clients). 

Bookkeepers, accountants, and outsourced CFOs are not innocent bystanders.  I have always been amazed by my profession’s lack of awareness in talking over people’s heads.  I have sat in many meetings and watched colleagues try to show off their deep understanding of the numbers while their client’s eyes gloss over.

When you add this up, you get a group of business owners tired of asking for help and getting answers they don’t understand.  As a result, they have stopped asking questions and reviewing their financial statements. 

Skipping the review of financial statements isn’t the answer

It’s hard to imagine now, but those of us in our late thirties and older remember family trips before GPS and phones.  When I was 15, we took a family vacation from Lincoln, Nebraska to Seattle.  It was a three-day drive with stops in places like Scottsbluff, Billings, and Coeur d’Alene.  We had a full-size family fan that we had nicknamed “Big Dog”.   Between the two front seats in Big Dog, we had accumulated 4-5 state maps and a general road atlas.  We would check them every morning, make our route, and then continue to monitor them during the day to see how far we were from our next stop and ensure we were on the right path.

Some might argue this was a better method than today…. I read stories about how people getting lost in odd places due to complete obedience to their GPS.  The point of my story is we would have been lost without maps.  We would have pointed Big Dog to the northwest and drove.  Eventually, we would have found Seattle, but it would have taken twice as long. 

Financial statements are like maps.  Just like a map, a financial statement tells an owner where they are at, how far they have to go, and what stops are along the way. 

There were several drivers back then that self-admittingly weren’t great at reading maps.  Believe it or not, people used to stop and ask for directions.  Maybe those people would talk with a spouse, neighbor, or friend before they would leave to get the best route.  The point is, they would ask for help.  Business owners who need assistance can ask their accountant, bookkeeper, or outsourced CFO. 

Owners who don’t review financial statements lack answers and assurance.  They don’t know if they are going down the right road.  They haven’t been monitoring their results when they undertake certain strategies. They don’t have any assurance in the decisions they are making.

Keys to Relevant Financial Statements

Just like a useful map, some traits must be present for your financial statements to have a maximum impact on a business. 

Let’s start with the primary two statements– the balance sheet and income statement.  You can do a Google search for each of these if you want a book definition.  But in a couple of sentences, let’s talk about why each is important to a business owner.

The balance sheet shows what a business’s resources and liabilities are at a certain point in time.  A business owner can quickly see the business’s assets, how much money they are owed, and how much money they owe to others. 

The income statement shows the amount of money the business has earned and spent over a period of time. 

The magic in both of these statements is how you look at them.  There should be a comparison over different periods.  There should be an analysis to tell you how the business is operating.  For instance, how long is it taking customers to pay your business?  Can you make changes to get paid fast? 

Too many conversations between accountants and owners go like this:

Accountant: Your accounts receivable was higher last month.

Owner: Remind me again of what that is?

Accountant: That is how much people owed you as of last month-end.

Owner: Oh yeah, we collected some big checks this month, so we are good.

Accountant: OK, as long as you have a handle on it.

If that is the sort of analysis a business owner is getting from their accountant, no wonder so many are choosing to do their own books. 

There are three keys to financial statements being useful – accuracy, timeliness, and relevancy. 

Accurate Financial Statements

Back in the dark ages of maps, a funny thing would happen…new roads would be built.  As a result, if you had a 5-year-old map, it wouldn’t have all the highways on it.   The map wasn’t accurate.

The same can be said with financial statements.  If the financial statements aren’t accurate, then they aren’t useful.  Accuracy may seem like a no brainer.  I can tell from first-hand experience that financial statements are mostly inaccurate. 

Some accuracy issues are due to not having a closing process that includes reconciling accounts.  For financial statements to be accurate, there has to be a monthly close process. This process doesn’t need to be overly complicated.  However, the process should ensure that key accounts are reconciled regularly. 

Many issues are caused because of duplication of transactions.  In the day in age where QuickBooks hooks into Shopify, bank accounts, PayPal, and so many other services, transactions often get duplicated. 

And lastly, some of this problem is because people don’t know what they are doing (bookkeepers included).  In 2018 over 130 public companies restated their financial results.  These companies often have accountants with years of expertise to compile their results and then have them reviewed/audited by other accountants.  Yet, they still can’t get it right.  What odds does a business owner with little accounting background have of always getting their results right?

Not all income statements are the same – in fact, it could be said no two are alike.  The reason being, companies report sales and expenses in a way on their income statement that help them operate the business.  This is OK, but a problem happens when no thought is put into this at all.  Business owners need to think through the best way to report the activity of their business.


On our car trip, it wouldn’t have helped much to stop and look for a gas station if we were already out of gas. 

One of the primary issues with financial statements is that owners don’t review them until 20+ days after month-end.  At that point, are they relevant? 

A process must be in place to ensure that financial reports can be produced on a timely basis.  It continually amazes me when business owners tell me it takes their bookkeepers 20-30 days to close the previous month.  WHY!?!?!?

My bookkeeping brethren will hate me for saying this, but there is no excuse for the closing process to take longer than 5-10 days (or less).


I am going to keep beating my road trip metaphor to death……it is hard to get to Seattle from Nebraska if your map is of Florida. 

The balance sheet and income statement don’t mean much by themselves.  If I look at a balance sheet and see that my accounts receivable balance is $40,000, what does that mean? Here are six additional questions I need to know:

  1. How does that compare to last month?
  2. How does that compare to last year?
  3. How many days is it taking me to collect my A/R?
  4. Are there any bad debts or slowing paying customers?
  5. What did accounts receivable do compared to my sales?
  6. How many days is it between when I pay for my product and get paid by customers?

I am not trying to give a lesson on accounts receivable.  I could go on about any balance presented.  The point is financial statements need to be presented in a relevant way.  Merely looking at a balance sheet or income statement isn’t enough.  A business owner needs to be able to look at it in a way that delivers context and helps drive strategic decisions.  That often means designing a reporting package that meets the needs of the business rather than a cookie cutter statement from QuickBooks.

Two Final Take-Aways

Business owners need to be strong in their conviction of financial literacy.  I know that the accounting profession as a whole has probably scared more than it has healed.  Never-the-less, business owners need to keep looking for solutions to their financial reporting until they find one that fits.

Here is my two-step process for business owners to start getting more from their financial statements every month.

  1. Sit down and write out 5 to 10 numbers that are vital to business success.  These might be analytics like customer acquisition costs, cash flow statements from operations, collecting money from customers, paying vendors, etc.  Write these in plain English.  Don’t worry about if the data to report on them exists right now.
  2. Once there is a list, a business owner should talk with their accountant, bookkeeper, our part-time CFO about how they can provide a monthly report that tells them the status of these critical metrics.  If the provider’s eyes cross or say it isn’t possible, get a new person.  Otherwise, have them design this report and review it every month.

This is an easy starting place.  A business can even ditch a full review of the financials (at least for now).  This reporting alone will start giving a business owner what they need to run their business better.

My name is Matt Krieger, and I am the founder of Krieger Analytics, a CFO advisory partner for small businesses and franchisors.  I am also the owner and franchisor of a concept called Monkey Bizness, in Denver, Colorado. 

As a small business owner with a background in finance and strategy, I realized the benefits that a CFO could bring to smaller organizations.  Most franchisors and small business owners don’t have a need (or budget) for a full-time CFO.  To better fit my clients, Krieger Analytics is a part-time resource.  While most think of CFO’s being involved in finance and accounting (we are), I am also involved in much more.  I partner with my clients by coaching them on strategy, gaining clarity on their business, building efficient and effective processes, and making confident business decisions.  Conversations are free, so don’t hesitate to reach out to me at


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