1) The indirect method of cash reporting The indirect method of reporting cash flow is what you’ll see most often. It’s the standard format across QuickBooks, other financial software, and for publicly-traded companies. How it works There are 3 sections of cash flow With all the components laid out, it’s easy to see why profit is so…
There’s a hierarchy to a well-oiled financial system: Here’s what that hierarchy looks like visually: What’s the takeaway? If you don’t have good bookkeeping — start there; find an excellent partner. If you have good books and regular reports — consider a fractional CFO or advisor. The ROI on those 2 items will shock you.
One challenge in managing finances is the overwhelming amount of numbers and metrics available to look at. Scoreboards in professional sports generally display only the most relevant stats, and your business should do the same. How do we handle it? Stick to 6-7 key metrics with a combination of leading and lagging indicators to watch…