Most businesses have someone responsible for accounting, financial statements, and taxes. Depending on the size of the company, that might be an outside CPA, a bookkeeper, a Controller, or an internal accounting department.
These functions are essential. But there's an important distinction between recording what happened, understanding what's happening now, and deciding what should happen next.
I like to think about financial management in terms of the past, present, and future.
The Past: Understanding What Happened
An outside CPA often provides an important historical perspective. Financial statements, tax returns, and other reporting help establish what the business earned, spent, owned, and owed during a particular period.
That information matters. It provides a record of performance, supports compliance, and creates a foundation for evaluating the business.
But historical information has a limitation: it tells you what happened, not necessarily what you should do next.
A profitable year doesn't guarantee adequate cash next month. And a decline in earnings doesn't automatically tell you which operating changes would improve the situation.
The past is useful, but it needs to be interpreted.
The Present: Knowing Where You Stand
Your accounting team typically focuses on keeping the financial information current, accurate, and useful. That includes maintaining accounting records, managing the close process, reconciling accounts, and producing financial reports.
Good reporting helps management understand where the business stands today.
But I believe there's an opportunity to go further. For example, a management dashboard might show cash balances, accounts receivable, gross margins, operating expenses, and a few meaningful KPIs.
The objective isn't to create more reports. It's to make important information easier to understand and act upon.
And if the information arrives six weeks after the month ends, its usefulness may already be limited.
The Future: Deciding What Comes Next
This is where financial and operational leadership becomes particularly valuable.
Should the business hire additional employees? Can it afford new equipment? Would a price increase improve profitability? Is there enough cash to support expansion? What happens if sales decline?
These questions require more than historical financial statements. They require forecasts, financial models, an understanding of operating conditions, and judgment about the alternatives.
A 13-week cash flow forecast can help identify near-term cash requirements. A financial model can show the potential impact of an investment. A few well-chosen KPIs can help management evaluate whether its plans are working.
But developing the analysis is only part of the job. Someone still has to help turn the decisions into action.
The Value of Connecting All Three
These aren't necessarily three separate people or positions. In a smaller business, responsibilities often overlap, and a capable financial professional may contribute to all three perspectives.
A company may have excellent accounting records but limited forecasting. Another may have detailed budgets but unreliable current information. A third may understand its financial position but struggle to implement the changes needed to improve it.
I've worked across all three perspectives, and I've found that the greatest value often comes from leveraging all of them.
Understanding the past helps explain how the business arrived where it is. Reliable current information helps identify what needs attention. Looking ahead helps management evaluate options and make better decisions.
Business owners need all three – not necessarily more titles or more people, but the right information, perspective, and practical support to move forward.