Helping Clients Actually Understand Their Numbers
Can we be honest for a second?
Most of our clients probably aren’t cozying up with their financial statements each month. Sure, they glance at them, nod politely… and honestly, who can blame them? Numbers without context are confusing.
But here’s the good news...
Clearly explaining these numbers (and why they matter) doesn't just help your clients, it positions you as the trusted advisor they need.
Here are 3 Common Client Questions
+ how to answer them:
1. "If I’m Profitable, Why Isn't My Bank Balance Growing?" 🧐
Explain it like this:
Profit measures your sales minus expenses when they happen. But your bank balance changes based on when money actually enters or leaves your account.
So even if your Income Statement shows profit, your cash might not increase if you're paying down debt, purchasing equipment, or stocking up on inventory.
The Cash Flow Statement clearly shows these differences and helps you see why your profit doesn’t always match your bank balance.
2. "Wait, What's Equity Again?" 🤔
Explain it like this:
Imagine you decided to close your business today, sold everything your business owns, and then used that money to pay off every debt. Whatever cash you have left afterward, that’s equity.
It’s the value you’ve built in your business. Keep in mind, equity can be tied up in assets like inventory or equipment, so it isn’t always cash you can easily access.
3. "Why Multiple Financial Statements?" 🙄
-
Income Statement:
Shows if your business made money or lost money over a certain period. Great for seeing how decisions, like hiring staff or changing expenses, affect your performance. -
Balance Sheet:
A clear snapshot of exactly what your business owns, owes, and what’s left (equity) at one specific moment in time. -
Cash Flow Statement:
Clearly shows how and when cash moves, explaining why your bank balance can differ from profit. It helps answer questions like, "Do I have enough cash right now?"
Each statement gives you a different perspective and together, they clearly tell the full financial story.
Quick Tips to Try!
- Send a short Loom video: Walk your clients through their statements in a few minutes. Highlight the key numbers and proactively address common questions. They can then play it on their own time.
- Use everyday language:
Skip the jargon and keep explanations simple and relatable. - Relate numbers to real decisions:
Clearly connect financial results to real world business choices, like hiring a new employee or launching a new product. - Connect the dots:
Show exactly how each statement ties into the next, helping clients see the bigger financial picture.
Ready for the next level?
We just dropped a downloadable resource and a full video deep dive on financial statements inside The Ayrre Club. (And trust me, this is just the start!)
Right now, we're searching for our Founding Members, bookkeepers looking for practical tools, clear guidance, and a community that’s genuinely got your back. (limited spots available!)
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