Who Are the Users of Business Financial Statements?

The owners of a company are mostly eager directly in managing the business in the case of microscopic or medium sizes companies. However, most medium private and public companies are usually speed by paid managers and directors who are different from the owners. As such these owners are not always interested in the day to day operations of their enterprise. They pay salaried managers to do so and as such need reports on the results of their business or investments.

Some invent of financial reporting is therefore required to prove the owners whether they are making profit or loss and how great and over what period. Usually such reports are prepared to camouflage a year or more if period of trading by the business is more than one year. Further investors or business owners needs to know whether cash is generated in the business to hold the business afloat, pay its creditors, pay dividends( if declared ) as well pay the other bills of the business as it continues in the trade.

The Managers are in need of financial information to attend them to manage the business properly. They need past information ( if any) on the business to get their forecasts or information of related businesses to spend in planning. This will benefit in budget preparation and planning, they need operational information for management direction and control. They also need to have strategic information for analysis and conversion into long term, medium and short term goals for the business.

The employees need information from the financial statements to stare how well or otherwise the company is performing. This will in turn affect their expectations when negotiating salaries and wage reviews, bonuses, or for modern / prospective employees of the business. The financial statement of a business speaks so mighty as employees in the blue-chip companies feel a job security from the outlook of the company proper performance as visible in the financial statements. Conversely when the performance is terrible as this could lead to downsizing or loss of jobs, wage freeze, amongst others.

The customers of a business will be concerned with the financial health of the business as they want to glimpse that the business will remain viable and continue in operation at least throughout the period of their business relationship with the company. Some customers may only be concerned with the immediate liquidity of the business where the relationship is one-off or short term.

Lenders and potential lenders of the business will be concerned with how superb or otherwise it will be to deal with the company and to come initial or further loans. The lenders will be looking at what assets the company may contain as security for loans as well its liquidity to pay interests from time to time and the primary when it is due.

The government will be looking at how well the company complies with statutory laws governing businesses and the financial reporting, what taxes are payable and whether taxes such are paid as they drop due. They will also view at the company policy on social responsibility, health and safety standards for compliance. Further periodic returns are required to be made by companies to the companies registry annually within a specific time from the approval of the the financial statements by its members in a meeting. They will check for compliance and penalize lateness or compliance issues.

Donors will also be enthusiastic in the financial statements of the company to review the list of donors particularly for charities and to gape how the funds were utilized for the different purposes. Analysts and the general public are also concerned with the financial statements of the business to elaborate and inspect how they handsome in performance. They earn indices from it which is archaic to narrate their investing public. In conclusion each financial statement is made to conceal all these interest groups.

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Financial Statements - Why Businesses Have Financial Statements

There are many reasons why a business may need or want financial statements. Unfortunately by the time a business contacts their accountant or CPA it is often not objective a want but a pressing need. This may be because there was a inquire of from an investor or bank that is willing to give a loan. There may be a minute window of opportunity that must be met in order to obtain the financing requested.

So let's digress to when a business has no pressing need then lets acknowledge why they would have financial statements?

Financial statements can be frail to gauge the financial health of he business in many ways. Standard financial statements have three components and each one can abet exclaim a different aspect of the financial health of the business. After all you would not want to go to a doctor if he was microscopic to performing only one test.

The first component of a place of financial statements is the balance sheet. The balance sheet shows the assets, liabilities and come by worth of the business. There is a familiar formula that accounting students know that explains how the balance sheet remains in balance. Briefly though the balance sheet will result in the owners smart the equity in the business. So if they began by investing $ 100,000 in the business and the equity is higher or lower than they know how worthy they have progressed and where they stand now.

The second component of the financial statements is the income statement. This shows for a period of time if there was a profit or loss. Depending on the type of business this may be completed in a single or multi step format.

The last piece is the Statement of Cash Flows. As the name states it shows how the business has been affected by cash and if their cash area has been improved or not.

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Marketing Strategy - Do You Have One?

Businesses everywhere are struggling. Companies are cutting help fair to try and cease solvent and yet many fail to site themselves in order to prosper. No matter how sizable or limited your organization, a determined marketing strategy must be employed in order to successfully grow. It's an ongoing process that you cannot let plunge by the wayside.

It is indispensable to remember that Marketing Strategy is not the same thing as Sales Strategy. You need both and they must work hand in hand. A positive marketing strategy equips sales with the tools they need to sell. It takes everyone and every department within an organization to work together to execute a product/service that people want to utilize. Everyone must work hand in hand and understand how together they get success. Often times I glance companies where departments don't rep along and don't understand how the others are valid grand less producing anything useful. The Sales department thinks they can write marketing materials and form plans and the marketing people typically contemplate sales does nothing but lunch with prospective clients resulting in a kill of money and bulky stomachs.

As leaders, it is our job to understand and manage to each group's strengths by empowering each to do what they do best and keeping them from focusing on the areas that are not their expertise. In a very ample sense I liken departments and their goals like the art of gift giving. Each departmental has a mission or a focus as it results to the "gift."

Marketing -Responsible for the overall presentation of the company "package" & message. What it looks like, how it is presented both to external and internal audiences. Marketing manages perception. Marketing is responsible for the card, the package and the bow.

Sales - Responsible for building relationships outside of the organization, responsible for the personal delivery of the package and getting the prospect to "initiate it".

Operations - Provides the overall value of what is inside the package.

Finance, Human Resources, & IT - All provide necessary resources to ensure that the value of the product via technology, people and processes work together to invent the best product/service possible. These groups are integral to both internal and external operations.

Often companies crop marketing when times are tough. Many CEO's have dropped the marketing function in order to slit costs. Not gleaming. We must protect our name above all else. This is what marketing does - they protect your name and the world's perception of it.

So where do we slice benefit when things rep tough? We study at every department. We ask our people to reach together and do more with less. People will rise to the occasion. They always do. And if someone doesn't want to be a share of the solution, the company is better off.

You really want to chop benefit? recognize your employees. They will lisp you where destroy is happening. They know where you can do money. Your employees have more answers than you realize. We often unbiased fail to ask them.

As my grandmother always said, "You have to untrue it until you form it." You have to continue making announcements about enhancements, case studies, current business (if you have it), and anything else that is newsworthy to your clients. Having a successful marketing view and strategy will continue to be display your message to the world in a world class plot. Remember "Dress for Success"? A superb marketing concept and strategy makes definite you always have the true scrutinize and the fair message every time you slide out the door. Perception is everything.

The tremendous news about the time we live in is that it is far easier and far less expensive to gain your name out there. But don't you dare finish doing it. If you do, it's like preparing for a bustle and then shooting yourself in the foot before it even begins. Don't do it.

Protect your name and your reputation first. Do the fair things for the accurate reasons. compose obvious your priorities are in order. By the very laws of nature, everything else will follow.

A fine name is more spruce than large riches; to be esteemed is better than silver or gold. Proverbs 22:1

Kelly Laughlin

President, The Highmont Group

Communications & Marketing

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