Business finance professionals HATE having to constantly ask for updated financial statements and business owners HATE being asked. Underwriters on the other hand LOVE financial statements and spend hours pouring over them. The subsequent report they write can have a significant impact on the future of the business.
When business owners ask me why they need updated financial statements, my usual reply is they may not need them, but they want them. How else would they know if the business is making money? When the time comes to borrow money, having up-to-date financial statements means better financing options and a lower cost of capital.
Many business owners HATE review time with their accountant or banker because much of it sounds like a foreign language to them. It can also mean discussing things they would rather not face up to or like to talk about when things are not going well. On the other hand, everyone LOVES to talk about financial statements when things are going well.
If we can find ways to encourage business owners to at least LIKE their financial statements it will improve their chances of success. They should avoid treating it like a report card and look at it as a good opportunity to look inside the business and make smart improvements that will lead to more money in their pockets.
Maintaining current financial statements allows business owners to receive timely and effective input from trusted advisors and good information from experts. Not putting an effort into keeping financial statements up to date is a recipe for disaster. Learning to LOVE financial statements is the key to business success!