Basic Financial Management for Small Businesses


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In this 1 hour webinar hosted by BizCentral USA, we discuss the basic financial management, bookkeeping and accounting methods to keep your small business on the right track! For more information, please visit:

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Basic Financial Management for Small Businesses

  1. 1. Basic Financial Management & Bookkeeping<br />Administrator<br />Nicole Roach<br />Marketing Coordinator<br />BizCentral USA<br />Key Speaker<br />Andrea RootAccounting Coordinator<br />BizCentral USA<br />A Webinar By:<br />
  2. 2. Welcome!<br />BizCentral USA: A “One-stop” resource center for small businesses nationwide!<br />Key Speaker: Andrea Root<br />Questions<br />Recorded Webinar Available At:<br /><br />
  3. 3. Agenda<br />Getting Started<br />Process<br />Financial Reporting Tools<br />Solutions<br />Conclusion<br />Questions<br />
  4. 4. Forward<br />Some of the information in this presentation is complicated and generally takes more than one day to learn. The best way to learn it is through practice using a work book and real-life examples. <br />We recommend consulting a professional before making any big financial decisions or changes<br />
  5. 5. Getting Started<br />
  6. 6. Getting Started: Key Terms<br />Bookkeeping – basic recording of various financial transactions.<br />Asset – something you currently, or will own in the future.<br />Liability – something you owe to someone else. <br />Accounts receivable – money owed by customers.<br />Accounts payable – money owed to others.<br />
  7. 7. Key Terms<br />Cash flow – a revenue or expense stream<br />Cash receipt – cash received<br />Cash disbursement – cash paid <br />Revenue – all incoming money<br />Expenses- all outgoing money<br />
  8. 8. Key Terms<br />Profit/Surplus – when revenue minus expenses results in a positive number<br />Deficit – expenditures were greater than revenues <br />Net – total before deductions<br />Gross- total after deductions<br />
  9. 9. Process<br />
  10. 10. Process: Basics<br />There are two ways to do this: <br />Cash basis<br />Accrual basis. <br />The greatest difference between the two is how you record transactions.<br />
  11. 11. Process: Posting Your Transactions<br />There are several ways to keep track of your financial records. <br />I’ll give you a high-level overview of two methods:<br />1. Single entry<br />2. Double entry<br />
  12. 12. Process: Single Entry<br />There are two alternatives for the single entry method:<br />
  13. 13. Process: Double Entry<br />The double entry method is the preferred method of recording transactions.<br />This method may seem complicated at first, but it will make things easier in the long run. <br />When done correctly, your books will always balance<br />
  14. 14. Double Entry<br />Every transaction has equal debit and credit entries<br /><ul><li>Debits reflect:
  15. 15. Increase in assets
  16. 16. Decrease in liabilities
  17. 17. Decrease profit (expense)
  18. 18. Credits reflect
  19. 19. Increase in liabilities
  20. 20. Decrease in assets
  21. 21. Increase profit (income)</li></li></ul><li>Financial Reporting Tools<br />
  22. 22. Budget<br />Budgets are important tools that can be used to create comparisons, analyses, and help manage your organization<br />Budgets are changeable<br /><ul><li>If your organization's actual revenues and expenditures are widely different from your budget, you need to determine the reason for the differences</li></li></ul><li>Financial Statements<br />A variety of financial statements and reports can be derived from bookkeeping information<br />You should become very familiar with these documents <br />You will likely see three primary reports amongst others<br />Profit and Loss Statement<br />Balance Sheet<br />Cash Flow Statements<br />
  23. 23. Profit and Loss Statement<br />Shows changes in assets throughout the year<br />Reflects if an organization is operating with a surplus or deficit <br />Highlights areas of concern<br />Is typically required for loans<br />
  24. 24. Balance Sheet<br />Shows the overall value of your organization <br />Shows total assets, subtracts total liabilities, and reports net assets <br />Generally reviewed at year end<br />Banks or accountants may ask for this document.<br />
  25. 25. Cash Flow Statement<br />Provides information about all cash inflows and outflows from operations and investments<br />Shows changes in cash throughout a given time period (quarter or year)<br />It is important to know how much cash your organization has<br />
  26. 26. Solutions<br />
  27. 27. Manual Record Keeping<br />Advantages: <br />You can organize the information using your own system<br />You will gain a better understanding of the process and it can be an excellent learning experience<br />Disadvantages:<br />There is a lot of room for error<br />You need to be highly organized and stay on top of the process<br />Your accountant may not understand your system<br />Can be very time consuming and stressful<br />
  28. 28. Computer Based Record Keeping<br />Advantages: <br />Makes entries easier and quicker<br />Automatically updates ledgers<br />Easily creates financial reports<br />Disadvantages: <br />You may not understand how the accounting process really works<br />You may become less diligent about keeping records<br />Software can be expensive and may take time to learn<br />
  29. 29. Outsourcing <br />Advantages:<br />Create and manage your income and expenses<br />Handle all of your federal and state report forms<br />Handle your key documents<br />Create Reports<br />Ensure compliance with regulations & industry standards<br />Decreases opportunity cost of time spent supervising, training, & correcting records, entries, and other flaws<br />
  30. 30. Outsourcing<br />Disadvantages: <br />You are removed from the process<br />You may not understand how the accounting process really works<br />This can become costly (but doesn’t have to!)<br />
  31. 31. Conclusion<br />
  32. 32. Conclusion<br />Financial management is necessary for every organization<br />Several methods can be used to fulfill common tasks and reach common goals<br />Financial management can be complex, although with the right knowledge, resources, and tools, it doesn’t need to be stressful, or overly expensive<br />Consult a professional if you have concerns about your organization's finances<br />
  33. 33. Don’t Go At It Alone!<br /><ul><li>BizCentral Small Business Services
  34. 34. Business Plan Writing
  35. 35. Business Certifications
  36. 36. Incorporation
  37. 37. Website Development
  38. 38. Graphic Design
  39. 39. Marketing
  40. 40. Bookkeeping & Accounting
  41. 41. Nonprofit Services</li></li></ul><li>Special Promotion<br />
  42. 42. Upcoming Webinars<br /><ul><li>Using & Updating YourBusiness Plan:
  43. 43. 6-29-2010 3pm EST</li></li></ul><li>Q & A<br /><ul><li>Contact Us
  44. 44. Nicole Roach:
  45. 45. Andrea Root:
  46. 46. Visit or Call 407-857-9002</li></ul>Find Us On:<br />Facebook Fan Page: <br />BizCentral USA<br />@bizcentralusa<br />