What to Look at Daily in Your Accounting Software?

Frequently I am asked what we look at daily when we run MAS 90 in our business. So here is the short list:

• Income Statement for the current month as of today, current period to date and current year to date compared to prior year and variance.

• Balance Sheet as of today compared to prior year.

• From these I look at the following:

  • Gross Profit

  • Cash balance

  • Accounts Payable Balance

  • Purchases Clearing Balance

  • Customer Deposit Balance

That’s pretty much it. I know I can get this from the Business Insights Dashboard, Income and Balance Sheet display, but I prefer to preview (not print) the financials. It drives everybody nuts because I usually decide to do it when someone wants to post and MAS still thinks previewing a GL report is printing, so it locks the file! But it only takes me a few seconds to take the pulse and I usually out before “Who’s in G/L?” is yelled for the second time.

“So what do you look for or watch?” I have been asked.

First, Gross Profit. I don’t need to look at total revenue because I don’t get to use all of that to pay the bills. For me…and most of you…gross profit need to hit a target number every month for my company to break even. Then I quickly calculate in my head….am I where I should be? For example: if your company has $100,000.00 a month of fixed expenses, you need to be at least at $50,000.00 gross profit on the 15th.

Second, I look at Cash less Accounts Payable less Purchases Clearing less Customer Deposits. This is how much of the cash balance is ours to work with. We can have a large cash balance and none of it be available because of pending payables. If you do this in your company and have a negative result, your going to want to look at your cash flow predictions in the Business Insights Dashboard because you may run out of cash in a future week.

Now, if you’re saying to yourself, “that won’t work, that information won’t be correct”. Then there are probably a few things we are doing that you would want to consider.

1. Make deposits daily and post them daily. If you are holding cash deposits in a desk drawer and not posting and/or depositing them, not only are you hurting your cash flow, but you’re keeping yourself from knowing where you are at.

2. Post receipt of goods daily and receipt of invoices daily. Not only will cash requirements not be current if you don’t post this information daily but if you’re trying to track inventory, it will not be up to date either.

3. Post sales daily. This is how you’re going to know BEFORE the end of the month if you need to step up revenue generating efforts.

4. Know your numbers. When I go to conference and talk to other business partners many of them are amazed that I know my numbers. Many business owners simply don’t look. Here are the numbers I always know:

   1. How much we need in gross profit to break even and where we are now.

   2. How much we need in gross revenue and gross profit to exceed same month last year.

   3. How much cash we have today and whether it includes payroll or not if one is coming.

   4. How much of that cash would be there if I had to pay everyone today.

Now I know what I need to do today, are we having a good or bad month and if I want to buy something, if we can afford it.

Please let us know what you think. If you would rather have a private discussion, please drop me a line at mike@derosamangold.com.  

Stay Tuned for:

- Here Be Dragons:  What to Look for in Your Monthly Accounting Data
- The Five General Ledger Accounts You Should Never Post To [aka How to Always Be in Balance]
- How to bring spreadsheet data into an Frx Financial Report
- How to control Purchasing in a Manufacturing Environment
- How to control Purchasing in a Distribution Environment
- How to control Purchasing in a Budgetary Environment