P&L: Accurate vs. Useful

There are aspects of running a small business that either check an obligatory box or actually help advance your goals and mission. “Did I get my bank account balanced/reconciled for last month? Yes. Check that off my list.” What if the act of keeping your finances up to date could serve a greater purpose for reaching your business’s goals? 

I like to say "accurate" is not always “useful”. Recently a client came to me with the desire to make some big changes in how her company is led. In looking at the P&L, it was accurate. It satisfied the needs a CPA would have for preparing year end tax requirements. 

What was missing from the P&L was a structure/organization that helped the business owner make decisions for what’s ahead. While a P&L reports the past, if designed with intent it can provide strategic direction for the future, too.

Of the P&Ls presented to me to manage, the majority resemble the metaphorical shoebox of receipts (or George Castanza’s wallet). A redesign of the P&L doesn’t change the net income numbers but does provide the business owner a clearer picture of how the company is performing and assist in navigating what’s ahead.

How would you rate your P&L? Useful? Accurate? Both? Neither? I’d be happy to give you my thoughts.

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Kyle Dreier enjoys helping small business owners navigate twists, turns and detours with sound financial data to support and help direct decisions.