Without doubt, the most common question that we are asked is "My profit and loss says that I made x amount of dollars, but I don't have this money in my bank account...where is it?".
Fortunately, this is a tracking and visualisation issue rather than an actual accounting issue. This means that you are able to use your existing data to customise reports so you can compare periods and show the outgoings, especially drawings, that have impacted your cashflow.
Practical tip. A clear chart of accounts further improves the data visualisation as it is ensures that you know what each area of profit, expenses, etc. is represented. Even greater functionality is available through Tracking Categories or similar.
Software like Xero and Quickbooks provide reporting and dashboard functions that allow you to review the data clearly by custom periods. MYOB etc. allow you to report on the periods though a bookkeeper or accountant are better to produce and guide you through the reports.
There are some great highly-customisable reporting solutions such as Fathom and Spotlight Reporting that can provide KPI and customised metric reporting as well as comprehensive dashboards and reports, and much more. These are the ultimate solutions and highly recommended if you want your finger on the pulse of your business though will require an accountant or adviser experienced in the software to get the true benefit.
Get started by talking to your accountant or bookkeeper about adding clarity to your chart of accounts i.e. specific naming and clear categories so you can better see what is happening in your accounts. If you want to discuss any of the tips and solutions mentioned here contact us and we can discuss your needs.