Tips for being on top of your numbers
by Jane Gregory - Head of Client Services on 21 May 2012
What really were the circumstances that led Greece to find itself in the situation that it is in? Like most things, it is impossible to pinpoint one single root cause. I have read numerous articles; some accusing Germany and France that they were the first to allow their economies to exceed the 3% of GDP limit to which they were legally bound.
Put in very simple terms, did the decision taken by the Eurozone finance ministers at the time to vote not to take further action in respect of the default, open the flood gates for other member states to manage their budgets more “creatively”?
Other mutterings point to clever statisticians at the Statistical Agency of Greece who made “problems” on their budget balance sheet simply vanish so they could still borrow. This clearly demonstrates the damage that having unclear, incomplete and inaccurate information can do.
A client made me laugh recently by jokingly telling me that “he loved it when I talk technical”! It’s true there is nothing worse than speaking to an adviser who reverts to using jargon and meaningless technical terms (and yes the client in question was teasing me because I had uttered the words, UK GAAP (Generally Accepted Accounting Practice)!). But the situation in Europe highlights the importance of being “on top of” the numbers – they should not be shrouded in mystery and jargon. A business owner is going to be able to run and grow his business more successfully if he has clear and up to date information. Use your adviser, if you do not have the resource internally, to help you with key areas from say tax planning and structuring, to budgets and cashflows.
Here are our tips …
- Work with your accountant or your finance department to produce accurate and above all meaningful budgets and cashflows.
- Ensure that you have regular, accurate and timely management information covering all aspects of the business to compare with your budgets and cashflows.
- Understand the numbers and what’s behind them. Ask questions and do not be afraid to challenge results which don’t make clear sense to you.
- Armed with knowledge of the financial position of your business and your strategy for the year ahead, ensure that you know your funding requirements for the 12 month period ahead. It is essential that you are au fait with these facts when liaising with your bank.
- Satisfy yourself that you have done sufficient contingency planning in case the unexpected happens.
Are you on the right track?
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