No matter your size, the amount of profit you generate is a good indicator of the health of your business. A good profit and loss statement provides a snapshot of your performance at any given time and can help you manage your business by comparing your current profits against projections.
How you choose to use your P&L statement will determine the structure. Some users choose to monitor profit at a high level, requiring less detail. Others use it as a tool to evaluate performance at the department, division, or product level, requiring a more detailed information.
Here are some tips for creating and managing your P&L statement:
- Gather your information.
You will need range of data that includes sales invoices, expenses, stock value, and depreciation. A cloud-based system can give you real-time access to the information you need without having to rely on cumbersome manual processes.
- Make sure your data is correct.
Your P&L is only as good as the information you use to build it. An ERP solution eliminates the need to consolidate data from disparate sources can ensure that you are relying on current, accurate data.
- Generate a new P&L statement each month.
You need a current snapshot to keep your financials on track. To ensure that you’re seeing the latest picture, you should be preparing a P&L statement each month.
- Follow up on any discrepancies.
Your P&L statement is a powerful tool for identifying potential problems. Investigate any irregularities and take action as necessary.
- Make data-driven decisions.
Use the information and insight your P&L provides to make informed decisions about the direction of your business. A cloud-based solution like Sage 100 allows you to easily see the key performance indicators that matter most to your organization.
A cloud-based accounting or ERP solutions, including Sage 100, can help you build and manage your P&L statement by consolidating all the information you need in one place and giving you access to real-time data. Want to know more? Call MicroAccounting today at 855-876-3773 or email us at firstname.lastname@example.org to find out more.