Why your business needs sound financial statements

Sound financial statements are key to business growth

When you opened your franchise, you dreamed of being your own boss and creating opportunities for yourself and others through business ownership. What you probably didn’t dream about was the tedious but necessary work of keeping the books and preparing financial statements. And maybe, just maybe, you’ve pushed some of those important franchise accounting tasks to the bottom of your to-do list.

Having sound financial statements is more important than you might think. Keep reading to learn why it’s crucial to do your paperwork, and how ignoring your franchise financials can impact the ability to grow your business. 

What kinds of financial statements does my business need?

There are three principal types of financial statements that most businesses use:

  • Income statements, also known as profit and loss statements, show exactly that. Has your company made money or lost money? They typically cover one month or can be broken down by fiscal year. Information on your sales, cost of goods/labor, expenses, profits and operating income is included.
  • Balance sheets contain data collected at a specific point in time, usually reviewed the last day of a given month or fiscal year. Information on your assets, liabilities and equity is included to show you and potential lenders, investors or buyers how much your business is worth.
  • Cash flow statements show the movement of cash in and out of your business. It may cover an entire fiscal year or a shorter period, like a quarter. Cash flow is a good indicator of the financial health of your business.

Why is having sound financial statements for my business so important?

Financial statements offer a quick glance into the financial health of your business. They also keep you as a franchise owner closer to the day-to-day performance of your business and show you what’s driving (or hindering) your success. From a legal or compliance standpoint, you may need to report your franchise financials to your Franchisor as part of your franchise agreement. Some lenders also require regular financial reporting to remain compliant with your business loan terms.

Having your financial statements in order is necessary if you want to expand your franchise portfolio. Lenders use these documents to see the financial health of your existing business and determine what kind of loan(s) you qualify for to grow it. Strong financials are the key to unlocking the best interest rates and loan terms, so being able to prove the value of your company on paper is extremely important.

Can I prepare these financial statements myself?

Financial statements need to be prepared regularly to help ensure accuracy. If you choose to do them yourself, you’ll need to make sure that you’ve included all the financial data that is relevant to each type of statement. It will need to be organized by category, reviewed, and reconciled before your reports are finalized.

Is there help available for preparing my financial statements?

The best way to ensure that your financial statements are done correctly is to hire a professional. They have the knowledge it takes to create accurate documents in a timely manner. BoeFly is proud to partner with BeanSquad, a bookkeeping service that understands the unique needs of the franchise industry. They offer a comprehensive solution to make sure franchisees have complete, accurate paperwork that complies with their existing agreements and can be used to grow their business when the time comes. “BeanSquad handles financial statement preparation end to end,” says Mike Greenblatt, Partner and Vice President of Operations and Strategic Growth at BeanSquad. “We also take on the responsibility of submitting financials to corporate, alleviating the corporate compliance burden.”

How can I learn more?

BoeFly is hosting a webinar on May 22 to help educate franchisees on the importance of having sound financial statements. You’ll hear from a franchisee, a franchisor, an SBA lender and a member of the BeanSquad team. There’s no cost to attend but registration is required. Save your spot today so you don’t miss out. so you don’t miss out.

All about BoeFly 

Since 2010, BoeFly has been working to help small business owners secure the funding they need. Today, BoeFly is a leading financial technology company that works to create customized lending solutions for businesses. Connect with a BoeFly representative and find out how they can help you move your business forward. Fill out the form to get started today.

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