They Thought They Were Losing Money, Until They Looked at the Right Numbers

Most small businesses think they are losing money at some point. Sometimes the numbers are just telling the story the wrong way.

I met two young business owners at a networking event who believed their business was struggling. Their monthly reports showed a loss and one of them had even taken a second job to help cover things.

But as we talked, it became clear the problem wasn’t the business. It was the numbers they were using to make decisions.

Their accountant was reporting income when it was received and expenses when they were paid. That’s exactly what you want for tax and BAS compliance. The issue is that this type of reporting isn’t designed to show how a business is actually performing month to month.

In their case, they had signed a large contract where the client paid 12 months upfront. For tax purposes that meant the first month looked highly profitable. After that, the income had already been recorded but the costs of delivering the work continued each month. On paper it looked like the business was losing money every month.

Once we spread that revenue across the months the work was actually delivered, the picture changed completely. Instead of losing money each month, the business was performing well.

From there we built a rolling forecast so they could see what was coming, not just what had already happened. That gave them the confidence to hire staff and grow the business.

Those same numbers became just as important later when revenue became more uncertain. Because they already had a clear forecast, they could see the pressure coming and make deliberate decisions about staffing and other costs before problems developed.

The lesson is simple. Tax and BAS reports are about compliance. Management numbers are about running the business.

Both are important, but if the only numbers you see are designed for compliance, they often don’t tell you whether you can afford your next hire, whether costs need adjusting, or whether you can push ahead with growth.

That’s where proper management reporting and forecasting make the difference. They turn financial data into something you can actually use to run the business, not just lodge with the ATO.  📊➡️📈

If this sounds familiar, I’m always happy to have a quiet chat. ☕️

Wayne Wanders is a Sydney-based Outsourced CFO and Business Advisor helping business owners scale and grow profitably. He works with founders and SMEs to improve financial clarity, strengthen cash flow and build businesses that can scale sustainably. If you would like help turning your numbers into better business decisions, get in touch.

Contact Wayne on wayne@arealcfo.com.au or 0412 227 052.

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Want a confidential discussion on your business situation, help with your grant application or to learn more about my Outsourced CFO Services, simply email me at wayne@aRealCFO.com.au or call me on 0412 227 052