Must do financial basic analysis.

Do not ignore your accounts…

My experience is that most business owners who are “not interested” or “not motivated” by accounts are in severe danger and major unpleasant surprises, often too late.

It’s amazing how some costs just creep up and before you know it, you are loosing money.

So, you are not a financial guru, most business owners aren’t.  But you cannot ignore your financial management responsibilities. Too many business owners I come across, have absolved their finances to an accountant or book-keeper.

Finance is not an annual activity; it’s at very least a monthly activity.

Yes by all means use a bookkeeper for entry, but on a monthly basis you need to review some basic financial dashboards.

Each month I would suggest you review the following three dashboards.

  1. Year to Date Profit & Loss Statement – per account code, per month
    what you are looking for here is , beyond how much profit or loss you made, are any unexplained shifts up or down month by month
    export this to excel so you can easily review
  2. Balance Sheet – this statement shows your real financial position – keep an eye out on liabilities such as GST to pay – particularly if you are on 6 monthly GST
  3. Account Receivables – Manage your debtors – be very aware of who owes you what – chase the poor payers as soon as they go over your agreed terms.

In addition to the above reports have a copy of your last years P&L month by month statement so you can constantly compare and look for trends.

The next major activity as a manager is to plan your forward cash flow. Businesses fail due to poor cash flow planning, particularly with items such as tax payments. These do not appear out of thin air. Work with your accountant to plan these 12 months ahead.

Accounting Systems

If getting financial reports out is a chore, I would suggest you either do not have a good accounting system or you or your staff do not know how to use it effectively. Some older systems such as MYOB are very powerful but users need to be trained to minimize entry time and maximize value.

Most SME’s should not require more than 4 hours accounts work per month. Modern tools have automated so much of the process.

In my business I shifted from MYOB to Xero this year. Here are my observations:


  • Automated daily bank feeds from both of my banks:   It’s quicker now to log into Xero either on my phone or PC than go through lengthy logins and clumsy interfaces from two banks – just to check balances and see who’s paid and not
  • Payment reconciliation now takes seconds – rather than minutes.
  • I am out and about – so being able to check up on reports is great– I did not need to do a days training to learn it.


  • I miss the powerful analysis tools and abilities to customize the set of accounts with multiple cost centres, that MYOB offered me

Recently I have become a real fan of Xero (its $60 per month) but offers the following advantages:

  • It’s available instantaneously for review by you and other trusted advisors
  • Most tasks can be automated – Reconciliation and entry of payments invoices take seconds
  • Enables you to keep an eye on your book-keeping staff
  • For a business of your size it should be taking you less than 4 hours per month to stay on top of all of your book-keeping need

6 thoughts on “Must do financial basic analysis.

  1. Hi Mark,

    It would appear from your comments that you may not been aware of a service that has been around for a number of years that many MYOB departed clients have migrated to. Shame you had to suffer for so long. As specialist systems accountants we offer clients a range of solutions, including Xero, but we are hard pressed to beat one called BankLink. This is targeted at accounting firms (4,000 use it) and many of them have not let it out of clutches. As accountants we have, and people just love its speed, simplicity and flexibility without compromising integrity. The beauty of the BankLink service is that it is able to access a significantly wider spread of data, including credit cards, rural supply companies, barter and credit unions without the clients giving away their access codes and having their scraped, something many clients do not approve of. I share with you a sampling of comments we regularly receive from clients and hope you find them interesting as you clearly understand the importance of good accounting.

    • “Well that was easy!!!!!!!” Paul, Motueka, Café.
    • “I am going to kiss this system. Finally something that is simple to use.” Adam Great Barrier Island, Retail.
    • “Thank you so very kindly for all your help……wish I had taken accounting at college.” Chris, Kaikoura, Luxury Lodge.
    • “All going well, never looked back. As I said to Barbara and Brian they won’t look back and will rue the money and time lost.” Pauline, Motueka, Plumbers
    • “BankLink is going awesome. I love how easy everything is! BankLink has certainly simplified the accounts here so all is going very well for us” Ngaire, Wanganui, Hospitality.
    • “Very many thanks for this. Your ledger report looks so straight forward compared with the Lawyers Closing Statement and clearly our accountants don’t understand it either and neither did they get the coding correct. Wow, are we glad that we have you on team!” Richard, North Canterbury, Farmer and Luxury Lodge.
    • “The Accounts Online service that uses the BankLink software has taken a lot of administration time off my hands. Now with BankLink, I click a button; all the transactions download into their system. I only have to code about five transactions a week, the software does the rest. . The team at Accounts Online made the transition to their software and the upload of data very easy and smooth. Highly recommended.” Andrew, Wellington, Restaurant and Bar
    • “Thank you, thank you, THANK YOU!!!! You have worked so hard and at such un-Godly hours to get this information together for me. I look forward to continuing our relationship and hope that it will proceed at a more leisured pace.” Yvonne, Wellington, Education.
    • “When the valuer was here he was impressed by how easily I could find information for him using Accounts Online so I gave him a pamphlet of yours I had here so hope you hear from him.” Margaret, Marlborough, Motelier.
    • “Once I had the software demonstrated to me I was satisfied that the information it produced met all our requirements, and we no longer needed an internal accountant. In fact, a cost of more than $40,000 per year salary has been reduced to $15,000.” Chris, Wellington, Large Hotel.
    • “My job here would be very difficult if I was still using the MYOB system I inherited – Accounts Online is a breeze in comparison & saves so much time. MYOB is a very clunky system, but Accounts Online is extremely user friendly.” Dean, Auckland, Large Medical Centre.

  2. Hi Mark

    Further to Wayne Campbell’s comment regarding BankLink, you wrote the following that you:

    “miss the powerful analysis tools and abilities to customize the set of accounts with multiple cost centres, that MYOB offered me the set of accounts with multiple cost centres, that MYOB offered me”

    BankLink has this functionality and can provide clients with multiple cost centres and easy reporting by cost centres and by job/project.

    Also, GST audit trail in BankLink can be run in account code order by bank or financial institution making the job of the client or the accountant a breeze to see if anything is coded incorrectly. This is cumbersome in Xero.

    An added advantage is compared to MYOB and Xero is you have to tick or Okaying each transation. This is slow compared to BankLink where the client only needs to teach the software a rule once and it will thereafter process all future transactions automatically. The client only then needs to address exceptions.

    Clients also complain in Xero about mismatching of transactions and data duplication.

    Most of our clients would spend around 5 to 10 minutes a week.

  3. Pingback: Keeping accounts in order vital to maintaining financial hygiene | accountsonline

  4. Most small NZ business owners ( I’m one with under 6 employees) create a job for themselves in starting or buying their business and never find the time to step away from the day-to-day tasks to look strategically at things like cash-flow mgmt, supply continuity, certainly not 12 months out! Though when you do it really allows you to relax and concentrate time on growth and development rather than chasing one preverbeal cash tail!

  5. Right here is the perfect blog for everyone who wishes to understand this topic. You know so much its almost hard to argue with you (not that I actually would want to…HaHa). You definitely put a fresh spin on a subject which has been written about for decades. Excellent stuff, just excellent!

  6. As system’s accountants specialising in helping and educating businesss owners understand their reporting by using simple easy to use software; I agree with Mark, as it is most important that business owners do not pass the responsiblity over to a bookkeeper or their accountant because nobody knows the business better than YOU! Be in control – if you do not know where to code something to put your hand up straight away. It is the business owner that gets audited not the bookkeeper or the accountant!

    The reports that our clients like are This Year, Last year and Variance so they can see easily if costs are blowing out. It could be as simple as what we did, moving back to our home office and still retaining our staff. For some this may not be practical but always be up front with your landlord (if you are renting) and provide fnancial information and if they do not budge – then that is their loss. Remember if you are struggling making ends meet then you have to make some decisions.

    Always look at your costs on a regular basis as many in this tough market left it too late and flushed their hard earned money down the toilet.

    Prior to christmas we helped a new cleint and as a result we picked up 24 errors made by accounting staff and found one business owner $7000. This business owner had placed total control with their accountant’s staff. The owner is so pleased she has more than one adviser that is ensuring things are accounted for properly.

    Another client in the insurance industry I have just picked up that their accountant has not been treating the commissions correctly and therefore she has overpaid GST.

    An important question is, How many business owners are prepared for the day you want to sell/exit the business?, If you have a business to sell, being ready for that day now and being able to produce the report out of accounting software easily and at any time without having to run off to your accountant to adjust the figures can save you dollars and time in the long run. It could also make a difference because if someone is wanting to buy now you do not want them to have to wait as it could mean you could miss out on the sale. That report is helpful for looking at your business in another light. If you want help with your business visit

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