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The essential reports you need to view the financial activity, the financial position and the timing of the amounts of cash coming in and going out of your business are produced from the information and balances recorded in your chart of accounts.

Businesses that thrive and grow know what should track and measure and why. The detail of what they want to track and measure is reflected in the design of their Chart of Accounts which in turn is a mirror of what is in their Business Plan.

Well managed businesses use business planning to predict what they expect to happen in the future. They always begin this exercise with the end in mind

Good businesses set less than five clear objectives and then think through and decide the best strategies to achieve them.

Strategies are then broken down into Activities with dates and priorities which are then communicated and assigned to the individuals or groups for execution.

The business plan documents the assumptions about what sales are forecasted to happen when, what the future financial activity, financial position and cash flow is expected to be.

Assumptions help you define the financial targets and predict the future financial impact. So it’s essential you are able to accurately track and measure these critical numbers

Cash provides the oxygen for every business and therefore it’s critical the supply and consumption is carefully managed to keep the business alive and help it grow and flourish.

Prudent and diligent financial planning and management can only be done if the underlying financial and supporting information behind the critical numbers is accurately recorded and well organised.

This can only be achieved with enduring discipline, a well organised chart of accounts and good small business management software.

Because of the rapid emergence of SaaS systems, online small business accounting software now makes it possible for business owners to see real time view of progress of their business against their plan.

Every number in the accounts of a business has a story behind it containing events and characters the details of which cannot easily be recorded in an accounting system therefore Small business management software as opposed to accounting software is now an essential part of the foundations of a well run business.

Continued in - Small business management software – The join between planning and accounting – Part 2 of 4