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1. You have financial reports such as profit and loss statements, balance sheets and cash flow statements generated every month.

____ Yes (I do it every month)
____ Yes (I have someone else do it every month)
____ Occasionally (Every couple months)
____ Not often enough

Your profit and loss statements show where you’re spending money and where you’re making money. In a previous post, we talk about polishing your P&Ls. This is an essential practice that should be done every month, at a minimum. These statements, particularly the P&Ls and a cash flow projection can be updated daily. For instance, if you’re trying to track individual profit center performance, keeping a daily record can help you determine the best actions to insure that profit center stays or becomes profitable.

Another previous post, “There’s gold In them there bills,” shows you how to keep a close eye on all your bills and invoices, making sure you’re getting what you’re paying for — as well as not paying for services and products you didn’t receive. Spending a few minutes monitoring your credit card activity and bank statements will insure that you know what’s going on with your money.

2. Do you feel that your monthly financial statements are timely and accurate?

____ Yes (I make sure of it!)
____ Sometimes (I have too much on my plate to pay attention)
____ Sometimes (I take a look at them)
____ No

If you feel your monthly statements are NOT timely and accurate, then you may have to (check all that apply):
____ Get better accounting software
____ Make sure the software you have is set up properly
____ Acquire a bookkeeper, accountant or CFO that will make sure your statements are accurate.
____ Have someone with financial expertise sit down and explain the financial reports to you in a clear and concise manner

Don’t leave the session until you have a clear understanding of what’s important, how to interpret the data and what actions you might want to consider. It’s critical that you know what your leading indicators are and that you learn how to understand and manage your margins.

3. Are you blocking out a specific time each day and month to review your financial statements?

____ Yes, I review key financial information daily
____ I have a weekly huddle with my financial person
____ Yes, I meet with my financial person every month
____ Sometimes, when I have time
____ No

To understand the value of a daily huddle, you may want to listen to our radio interview “How To Hold an Effective Daily Huddle.” The more you and your leadership team understand how the daily events direct the company toward its goals, the better your company will function. The whole point of the daily huddle is to develop daily routines. The more consistently you and your financial person or advisor establish rhythms to review your key financial data, the more you will be in control of your company and its assets.

4. Do you understand your financial statements and make the adjustments to improve your profitability and cash flow?

____ Yes (I sit down with everyone and make sure we all understand)
____ Sometimes, (I understand them — but don’t always know what to do)
____ No (I check them out — I think we’re doing okay and don’t have to make any adjustments)

There’s a lot that can be done just in controlling your outlay of money. In this post we outline there are four simple steps you can take to clear up that A/P so that it’s accurate. The goal is to stop paying late fees or finance charges. More importantly, having control of you’re A/P will prevent a black mark from showing up on your company’s credit rating because of late payments or foolish spending. Starbucks is a prime example of a company taking action based on their financial statements.

 

Originally published on CBS MoneyWatch as “An Assessment Checklist For CEO” on April 8, 2013.