IT and Business Insights for SMB Solution Providers

I Don't Like Justifying My Finances . . . But I Have To

I just got off a Zoom call with my outsourced bookkeeping company. I'm pretty good with my finances. But it is still never fun.

Financial people care about things like balance sheets. I look at my balance sheet when they force me to, or when I'm having my taxes done. And to be honest, I don't really look at it with the tax guy.

Financial pros want me to keep my books in a format understood by financial pros. I don't want to keep my books that way, but I get a little closer to their methods every year.

A lot of their questions are about things I don't want to answer. Why is no revenue from this source in February? Where did these payments go? Why doesn't this balance? How come this number is $10,000 higher in July?

As a long-time business owner, I don't want to justify my finances and my decisions (and my processes and habits) to anyone. And certainly not to someone who is educated and knows a lot about how money flow in, out, and around businesses.

Much of what they want to see is related to the overall valuation of a business. Here's an example: When I do payroll, I want to put entries in QuickBooks that look just like the "checkbook" entries created by the payroll service. That is, Net Pay, Employer Liabilities, etc. But the bookkeeper cares about gross officer compensation, staff compensation, deductions, and other details that need to be calculated and are not easily visible in the checkbook.

Their method takes a little more work, involves invisible journal entries, and is useful on the day I sell my business. My method is much better for running the daily operations.

I wouldn't say I argue with them a lot . . . but they might.

The old man in me wants to say, "I've been doing this for twenty-five years, with several successful companies, and making a good profit along the way." But I know this whole uncomfortable process is good for me - and my business.

As a very small business, I could isolate myself, do all the finances myself, and never discuss this stuff with anyone. I used to go over this with my wife for about fifteen years. And when I've had someone else running a company, I always included them in financial discussions. Why? Because justifying my decisions is good for me and the company.

Sometimes, people you pay to help you are brave enough to disagree with you. And that's usually a good thing, because it helps validate your thinking. This is particularly important with finances because they are a critical measure of the success of all your decision making. And "in the end" (as they say), good finances will drive the value of your enterprise.

Who do you justify your finances to?

-- -- --

Related Topic: Register for the free webinar on your End of Year Checklist.


About the Author

Karl W. Palachuk, is a technology consultant, author, speaker, trainer, and coach. He is the author of fifteen books. He has built several successful businesses, including two managed services companies. His books include Managed Services in a Month and The Network Documentation Workbook. Karl is a frequent trainer and speaker in the SMB Community. His popular blog can be found at He has more than twenty years experience as an I.T. professional and serves on advisory panels for several hardware and software companies.

ChannelPro SMB Magazine

Get an edge on the competition

With each issue packed full of powerful news, reviews, analysis, and advice targeting IT channel professionals, ChannelPro-SMB will help you cultivate your SMB customers and run your business more profitably.