Is Your Profit and Loss Garbage? Ensuring Accurate Financial Reporting in Your Business

Hi there. Welcome to Better Business Insights. I'm Liz Jarvis, and we help take the stress out of numbers and accounting for clients. Today's topic is garbage in, garbage out, and I'll tell you what, it is so relevant in today's world of computerised….. everything! But most particularly in accounting, as you probablybeen taught before, if you put garbage into a data management system, then it's going to spit out wrong information. And that's going to lead to bad decisions because we only collect- well, the main reason we collect data, is to make decisions, is to review the data and make decisions based on the data.
So, if in your accounting system, it's garbage in or garbage way of recording things and separating things, then it's going to bamboozle you when it comes out the other end, because it's garbage.
Do you know whether your profit and loss statement is garbage? Have you looked at it? I encourage Business Owners to look at their profit and loss statement on a regular basis, because how else will you know, whether you've just got garbage?
Unfortunately, Business Owners have become very disconnected from their books, from their bookkeeping system. Even if they're doing it themselves, the computer's doing quite a bit as well. But not looking at the output of the work that it takes to produce the financial statements, then how do we know if it's right or wrong?
I've seen some severe garbage, and unfortunately, a lot of your accounting bill with your Accountant might be taken up just sorting garbage. We didn't use to have to sort garbage because people weren't doing their own computer work. Our computer systems or our accounting systems were expensive becausecomputers weren't as cheap as they are now. Now that computer systems and accounting packages have become really cheap, people set them up themselves sometimes without the help of an Accountant, because this change has happened so rapidly. When the GST started about 20 years ago, we started this real thing of everyone can do their accounting themselves. And more recently with cloud accounting, that temptation to just get in and get started is even higher. Let's face it, the marketers market it as “this is easy”. And then the Business Owners get in and start doing what they do, and gradually find out that they're lost. Potentially lost in amound of garbage! Not great. Not great at all.
So, it's important to me that Business Owners understand that it could be all garbage, but the sooner you look, the sooner you'll find whether there's garbage, the sooner you'll sort it out and the better your business can go. Because we want your accounting data to bring you the better business decisions! Not to be wasting your time sorting garbage or the Accountant's time and their high rate sorting out your garbage. We need it - well-defined and carefully understood.
The output, the profit and loss and balance sheet is the story of your business. Don't you want to know what that story is? Don't you want to know how well you're going? Or how well you're not going so that we can quickly get it changed and get you going straight, straight down the profitability route.
I think that's enough for today. This is one of my passions- garbage in, garbage out. Find out whether you've got garbage in your system. Reach out to us through any of our social media channels, through our website. I'd love to meet you one day and help you on your journey.
See you in the next episode.

This video will help you to understand just how easy it is to have wrong information in your accounting system. Get into it as soon as you can - after all you are the business owner and you have a right and a need to know what's going on!

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