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Cash or Card? How do you pay for things in your business?

Cash or Card? How do you pay for things in your business?
This one’s for all my CEO’s!
There are 3 Financial Statements that are going to put MORE MONEY into your bank account!
All you have to do is read them regularly…
With everything you already do, I’m sure it’s next to impossible to put one more thing on your  plate, BUT
These Top 3 financial statements are crucial to your financial growth. 
How do I know?
Years of experience working with CEOs just like you.
And because of that, I can help you (or your team) understand these three statements.
The bottom line is that by keeping accurate books, you will be better able to;
  • Price your products accurately.
  • Know if you’re making or losing money—in general, and on specific jobs.
  • Know your cash flow—both in the short and long term—and work with bankers and investors.
  • Let the tax agencies know how you’re doing.
The important thing is to not let your financial information intimidate you. 
All you need to remember are these three basic financial statements to keep track of your money:
Let’s get right to the point!
Important Financial Statement #1 – The Balance Sheet
Your balance sheet outlines your business assets. Current assets are cash or can be converted into cash within one year, things like accounts receivable, inventory, prepaid expenses, etc.
Fixed assets are property and equipment owned by your business—things that you don’t intend to sell. For example, your trucks, trailers, large construction equipment, office furniture etc
Balance means that the left side will always equal the right side. If they don’t equal then you’ve made a mistake. Sorry but it’s true. Assets = Liabilities + Owner’s Equity
Important Financial Statement #2 – The Income Statement
This is your profit and loss statement. It’s used to track sales and expenses. The difference between your profit and loss is your net profit. 
The formula for calculating this is:
income – cost of sales = gross profit, and gross profit – fixed operating expenses = net profit. 
Keep in mind that larger assets may be depreciated so that those bigger expenses don’t skew your profitability numbers. 
Another key point to remember is that your income statement presents sales and expense activities over a period of time as opposed to your balance sheet which shows your financial condition at a point in time.
Important Financial Statement #3 – The Cash Flow Statement
This is the financial document that presents the income actually received and expenses actually paid. 
This statement generally shows beginning cash balances, cash inflows, cash outflows, and ending cash balances. In the most basic form, a cash flow statement is presented in the following format:
  • Beginning cash balance
  • Plus cash inflows
  • Minus cash outflows
  • Equals ending cash balance.
Hopefully you can see how important these statements are for your business’s financial future.
To sum it all up, the balance sheet shows your business at a particular point in time and outlines the assets you have and who owns them. 
Information on cash and earnings included in the balance sheet is drawn from the other two statements.
An income statement shows your earnings over a period of time.
The cash flow statement shows cash coming in and going out and what the net result is over a period of time.
If you’re not regularly reviewing these three financial statements, ask a team member to pull them for you. 
Make sure you set time aside monthly to review these statements…
If you don’t have a team member that can guide you in understanding what these financial statements mean for your construction business,  feel free to comment below with “next steps” so I can reach out to you to talk about how my team and I might be able to support you!