Business is a complex system with many components. The business owner manages sales, develops the product, sets up marketing, and manages employees. The parts of the system are interconnected - there will be no sales without marketing; no one can develop the brand without personnel. Business relationships can be challenging to track and measure. But all of them are reflected in finance - the blood of a business that helps to move it forward.
Why keep financial records?
In business and organization, there are usually two reports on business management: accounting and financial. Accounting reports are created to be submitted to the tax office, and financial accounting helps to see the real status with money in business and make decisions. Often, the owner prepares financial statements independently or together with the financial manager or outsources professional financial services to manage the entire activities.

A Business owner always has more important things to do than reporting. You need to sign a new contract, negotiate with a supplier or go to production. Therefore, reporting is carried out from case to case, expenses and incomes are forgotten, indicators are not counted, and costs are not classified.

We recommend that you manage your finances consciously. Hence, before talking about reports, let's figure out why they are needed.

1)To avoid critical mistake:

Without reporting, the business owner is poorly aware of his actions - it seems that he can painlessly take money out of business or take the next tranche of the loan. But both can be disastrous and ruin the company.

2)To make informed decisions:

Without accountability, the entrepreneur acts blindly - goes into the unknown and relies only on his instinct. Sometimes the risk is justified, but in the long run cold calculation and rationality wins.

3)To see your business:

For many entrepreneurs, a company is an ephemeral entity. There are employees, office, warehouses and goods. But all this lives in parallel dimensions. Reporting helps to reduce everything to one denominator and see the whole business.

Reporting helps you avoid mistakes, make informed decisions and gain a deeper understanding of the current situation. Each of the above scenarios has its own report. We will analyze them with real examples.

First report. DDS or cash flow
Everyone wants to avoid mistakes - get paid on time, avoid tax fines and avoid cash gaps. The cash flow statement or DDS solves all these tasks.

The financial statement of cash flows contains all the receipts and expenses of the company's funds for the period.
DDS shows how much money the company received and how much it paid, how much it had and how much is left. Each operation is entered into it - income or expense; note who was paid and where the money was received from; divide the movement of funds into categories.

Even in a small business, the account of operations can go into the hundreds. The coffee shop buys grain, water, milk and paper cups; pays the roaster, barista and cleaning lady; calculated for rent, taxes and loans.