Tracking Income and Expenses
As the owner of a consulting services firm, you need accurate information on a regular basis to ensure that your business is running smoothly. As a single-person firm, you may have all the information you need in your head. But as your firm grows, you will need various data daily, weekly, or monthly. Let's take a look at what you will need and when.
Daily Reports
In order to manage your consulting firm, you will want the following information on a daily basis:
Cash on hand
Bank balance
Daily summary of sales and cash receipts
Daily summary of money paid out by cash or check
Correction of any errors from previous reports
You can either prepare this information yourself, have an office employee prepare it for you, or rely on your accountant. While daily records will not show trends, they will help you get a feel for the level of business that you're doing. You'll also be able to spot problems before they become serious.
Weekly Reports
Once a week, you or one of your employees should prepare a weekly report on your firm. While they are still not sufficient for long-term planning, weekly figures will help you make small corrections in the course your business is taking. Weekly, you'll want the following reports:
Accounts receivable report, listing accounts that require a call because they are more than sixty days past due
Accounts payable report, listing what your business owes, to whom, and if a discount is offered for early payment
Payroll report, including information on each employee, the number of hours worked during the week, rate of pay, total wages, deductions, net pay, and related information
Taxes and reports required to be sent to city, state, and federal governments
Your weekly reports should be prepared by the end of business each Friday so you can review them over the weekend or early Monday morning.
Monthly Reports
Once a month, you will want to review a number of pieces of information that have accumulated through your daily and weekly reports but were too small to analyze clearly. Now that they are part of a full month, information about cash flow, accounts receivable, and other parts of your business make more sense and can be more easily acted upon. Here are some of the reports and information you will want to see every month:
Monthly summary of daily cash receipts and deposits
General ledger, including all journal entries
Income statement showing income for the prior month, expenses incurred in getting the income, overhead, and the profit or loss received
Balance sheet showing the assets, liabilities, and capital or current worth of the business
Check reconciliation showing which checks were deposited and which were applied by payees against your business checking account, and verifying that the cash balance is accurate
Petty cash fund report to ensure that paid-out slips plus cash equals the beginning petty cash balance
Tax payment report showing that all federal tax deposits, withheld income, and FICA, state and other taxes have been paid
Aged receivables report showing the age and balance of each account (thirty, sixty, ninety days past due)
Let's cover three of the most important documents you'll review monthly: your income statement, your balance sheet, and your cash flow forecast.
