Thorough and high-performing financial statements are the heart of a successful eCommerce business. A firm grasp over your financial figures can dictate how your business is performing and where it needs to do better. Business owners are always on the lookout for ways to empower themselves to make intelligent operational decisions. Here’s how good financial statements play a role in that process.
eCommerce Accounting as a Business Language
Ultimately, your business goal is to make money. However, introducing a state-of-the-art product to market isn’t as simple as you’d like it to be. Novice company runners tend to forget the other faces of business—from marketing to accounting.
Paying attention to your financial statements points to where your money is going and where it shouldn’t. If you aren’t confident in your ability to track your cash flow, thousands of eCommerce accountants are ready to fill in for you.
With an extra set of eyes, you can make challenging decisions regarding additional loans, new hires, marketing spend, warehouse activity, and pretty much every part of the business backbone.
So—Why Don’t People Pay Attention to Their Financial Statements?
Business showrunners have a lot on their plate—it’s that simple. A lack of time, knowledge, and understanding are reasons accounting may not be a top priority. As a manager, you may not have enough hours in your day or can’t commit to learning to navigate Quickbooks or Xero. Yet, financial statements can tell you a lot about your business.
The Importance of Financial Statements
Accounting tells you three things: where you’ve been, where you are, and where you can still go. Without it, you pilot your business jet completely blind. Thus, familiarizing yourself with its foundations can better inform the decision-making process, even if you’re outsourcing the majority of your financing.
When dipping your toes into the accounting pool, statements you should know include:
This statement outlines how much you’ve made, how much you’ve spent, and how much you have left every month. With it, you can measure against your monthly goals and focus on areas that require improvement.
A balance sheet reflects how much your business is currently worth through equity and where you stand. It also communicates how likely you are to go out of business, whether you’re experiencing a drop in your cash flow, and if bankruptcy is expected to occur.
Your cash flow statement is a conglomeration of your profit and loss documents and balance sheet. Often, it’s the most useful of the three but the most challenging to decipher. As such, business owners tend to under-utilize it.
You don’t need to commit to becoming fluent in accounting—but getting to know its fundamentals can take you a long way in meeting your profit goals. Part of achieving business success is paying attention to every aspect of your operations—even the ones with numbers.
With eCommerce Accountant, you can craft a more detailed picture of your business’ financial standing. Through our comprehensive eCommerce accounting services, staying on top of tax obligations and increasing your profit is just at arm’s length.