Do you ever feel like you’ve been to a foreign country when you leave your CPA’s office? I mean, really, they seem to speak in an altogether different language.
It’s like you need an English-to-CPA dictionary. Or at least a phrase book. Now there’s a thought.
Instead of immersing yourself in a whole ‘nother culture and language of numbers, how about you learn a few key terms and notions that will help you navigate the financial landscape between you. That is, the balance sheets, income statements and tax returns that describe your company in financial terms. After all, you know your company best—they just know the numbers better. It is, really, up to you to put two and two together…oh, sorry, I couldn’t resist.
Here are a few key words, phrases and concepts to keep top of mind when next you visit with the green-eyeshade monster:
- Accounting period
- Cash flow
- Cost of sales
- General ledger
- Gross profit
- Income statement
- Return on investment (ROI)
- Working capital
While this doesn’t cover everything, it will, in the continuation of the travel metaphor, at least keep you from missing your (financial) train. You don’t need to know all of these concepts in great detail, but you should at least have a passing definition and some examples in your mind for each one. Over time and as your relationship builds with your financial team, you will become more literate in the language. And they, in turn, will become more knowledgeable about your business and industry.
For more on how to speak the language of finance, call or write to us. TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.
**photos courtesy of Unsplash (Ivan Shilov and Waldemar Brandt, photographers)