Following up on yesterday’s post (see here) about the back office and recordkeeping. Another huge benefit of having good records is that it means your financial reports are accurate. If your financial reports are accurate, you make better decisions because you understand the current state of your business. Which means you can plan better for the future.

Surprisingly, many entrepreneurs don’t know the true financial health of their business. They don’t have good financial reports, or they don’t know how to read them. They make decisions based on bank balances (see here), but bank balances don’t account for unpaid liabilities.

Having accurate financial reports that provide a full picture of the business’s health is critical for entrepreneurs. And financial reports are only as good as the data and the processes that create that data. Recordkeeping and the back office are boring and seem like a cost center. But it all starts there. If you make them a priority, the trickle-down effect is a clear picture of the business’s health through accurate financials, which empowers you to understand the current state of your business and make better decisions about the future.