Owning your own business requires you to wear many hats. One of those hats would be bookkeeping. While it is not necessary to know everything about bookkeeping, you should know the basics. One such area would be the cost of goods sold. The cost of goods sold is the expenses that go into the goods before the sale. There are different costs associated with the goods that are sold by a business. The goods pass through several processes before the sale, and each procedure carries certain costs. Meanwhile, the calculation cost of goods sold is the part of the company’s bookkeeping that helps a business determine the amount of costs incurred from the start to the final sale.
There are considerations when calculating the costs. The formula will give you the total cost accurately if followed correctly. It is stocked at the beginning of the period plus purchases during the period minus stocks at the end of the period. It means that stock at the ending of a financial period is subtracted from purchases made during the fiscal period and the stock that was already available with the firm.
In addition to the above, if there are no stock items that a business house has in store at any given time and that it intends to sell or use to make a product or render a service. At the beginning or end of the year, the cost of goods sold is also called the cost of sales.
Furthermore, the cost of goods sold by a commercial enterprise includes only purchases, including transportation costs, customs, and various non-refundable taxes. This reveals that the cost of goods sold does not include the cost of purchases only. Still, it also consists of the costs that are expensed on the transportation of goods. The costs that are expensed over the transport include shipment costs, fuels, logistic costs, which are added to the cost of goods sold. The cost of goods sold also consists of the materials that a firm acquires to produce those goods.
On the other hand, if there are stocks at the beginning or end of the year, the cost of the goods sold is also called the cost of sales. The main reason for considering the beginning and ending stocks as a cost is that they have been purchased and maintained by the company. One of the most essential functions is the role of inventory in determining the cost of goods sold. The inventory has been given the name of stock in the beginning and stock at the ending of the period. At the same time, the purchased stock is added to the stock that was available at the beginning of the period. It is also said to be the cost of sales.
Moreover, the cost of goods sold carries a notion of gross profit. The excess of the operating expenses of a financial year on the gross profit margin can be an excess of the turnover on the cost of the goods sold. The calculation made as follows:
Likewise, operating profit and excess of operating revenue over the cost of goods sold for a given period is determined without reference to operating expenses, other income and expenses, and taxes. When it comes to a manufacturing company, the composition of the cost of goods sold is also called the cost of sales. Moreover, the calculation of the cost of goods sold by a business is more complicated, as demonstrated. Hence, it can be said that a company should have a better understanding of the process of calculating the costs of goods sold to identify what cost has been incurred on each business activity.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Accounting policies are specific principles, rules, procedures, and practices used by a business in the preparation of financial statements. Accounting policies include methods, approaches, measurement systems, and procedures to present disclosure. The difference between the accounting policies and the accounting principles is that the accounting principles are a set of rules, which the company must obey.
Misstatements of information about financial reporting items are identified as material if they can affect the decisions of users. The choice and application of accounting policies should be based on the relevant International Financial Reporting Standards. When a company acquires assets from different methods such as loans, cash purchases, or lease options, management would need to refer to these policies and principles so that assets can be reflected accurately in financial statements.
Changes in Accounting Estimates
Accounting Estimates are frequently used in the preparation of financial statements. Thus, accountants cannot confidently predict the value of the bankruptcy value of an asset, its service life, as well as other parameters influenced by environmental factors. Accordingly, the receipt of new information leads to the need to revise previously made estimates. Evaluation involves professional judgment based on the most recent available data. For example, an estimate may be required to determine the number of debts, the degree of impairment, the fair value, the useful life, and the amount of liability for warranty service. Accounting estimates are approximate values that may need to be revised when additional information becomes available. Bookkeeping can also be used for keeping the record of accounting estimates.
Principles of Accounting and Financial Reporting
Some of the main principles of accounting and financial reporting are:
The principle of business continuity
It means that the assessment of the assets and liabilities of the bank is carried out based on the assumption that its activities will continue.
The principle of consistency
This principle requires banks to regularly (from year to year) apply their chosen accounting policies, i.e., a set of principles, methods, and procedures that are used by the bank to compile and present financial statements.
The principle of prudence
Under this principle, accounting uses valuation techniques that should prevent underestimation of the assessment of liabilities and expenses. It also should avoid overvaluation of the bank’s assets and revenues.
The principle of accrual and compliance of income and expenses.
According to this principle, to determine the financial result of the reporting period, it is necessary to compare the revenues of the reporting period with the expenses that were incurred to obtain these revenues.
Economic Operations
Economic operations are the actions or events which can influence various business and investment decision which will affect the structure of the assets, liabilities, and capital. Economic operations can influence the accounting policies because, over time, economic operations identify various loopholes in policies due to which policymakers require to amend the policies as per the current economic conditions.
Financial Policy
The short-term financial policy is a system of measures aimed at the smooth financing of the current activities of the corporation. Its main tasks are to carry out normal activities at the expense of existing capacities, ensure current financing, and generate its sources of financing. The goal of the financial policy is the use of finance to achieve strategic and tactical objectives. Financial policy is the most crucial element of the development of the corporation. It is not limited to the solution of local, isolated issues, such as market analysis, the development of the procedure for passing and negotiation of contracts, the organization of control over production processes, but is comprehensive.
One of its key tasks is to select the optimal mechanisms that allow achieving the set goals for the corporation in the shortest possible time and at the least cost. But, financial tactics are a financial policy aimed at solving specific current tasks, which are specified in the financial strategy of the corporation. It ensures a correct and timely change of financial ties, as well as redistribution of cash flows between resources of the corporation and between all structural and separate divisions.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
The process of restaurant monitoring involves the gathering of data about the performance of the entire restaurant. This includes the individual performance of employees and other factors. The system collects the data necessary to find the causes of the failures of the restaurant. This helps with planning for further development of the information base of your restaurant.
All the collected indicators of the restaurant are saved and available for further analysis. For each of the indicators, relevant analytical tools are provided: diagrams, alarms, and reports. Bookkeeping is a valuable tool that can also be used in this process.
If the reviews of your restaurant are not more than 100 per week, you do not need a monitoring system. If the feedback is much larger, or important for you to know, you need a monitoring system.
Monitoring the key performances of a restaurant can be difficult. Also, monitoring the trends and preferences of your target audience is important.
Monitoring and Key Performance Indicators for Restaurants
Staff management
Salary expenses (%) – expenses for wages, as a percentage of sales.
Total labor cost (%) – the amount of salary costs and other costs that cover insurance, retirement, pension, and other taxes included in your payments as a percentage of sales.
Labor time (hour) – This indicator is especially useful for comparing sales with the productivity of staff.
The function of labor load (for the time-based form of payment for personnel)-Executives usually charge a surcharge to the service staff for the amount of wages.
The average duration of employment- A way to test your progress in retaining staff is to add the total number of weeks that all your people worked for you and divide it by the total number of staff.
Average hourly rate – Divide the total wage by the total number of hours worked by your staff.
Production management
The cost of food (%) – The cost of food, expressed as a percentage of sales of dishes at a price in the menu. This indicator can be used both for specific dishes and for all products in a public catering establishment. This indicator (28-35%) helps to properly form and control the price of the dish.
The total cost of products – This shows how big your total cost of products was. Equal to the average prime cost multiplied by the number of units of measure.
Cost price per customer
The cost of production of dishes (%) – This figure is calculated as the cost of production of dishes to the sales of these dishes. Bar products (alcohol, drinks, etc.) are not considered.
Labor costs for the production of meals menu (hour) are the number of hours worked compared with sales to measure performance.
Office of the restaurant (Front of House & Restaurant Management)
Total sales per person are the ratio of sales to the number of customers compared with the previous week or month. Analysis of fluctuations are at different times of the day.
The number of customers is a simple indicator and a good measure of your popularity.
Analysis of the cost of uniforms, aprons, tablecloths, etc. These costs can easily shock you! The productivity of personnel determines the labor costs of the staff of the hall (waiters). The ratio of sales (the amount of closed accounts) of the waiter to his labor costs. Customer satisfaction is a general characteristic, based on the analysis of feedback information, complaints, and other methods.
Sales and management functions
The effectiveness of marketing and advertising costs are basically your marketing and advertising costs that are comparable to your income from them. It is a difficult indicator to measure, but definitely worth it.
The number of pre-orders, one should be attentive and active enough to get the orders in the week and a month, and so on. Especially at peak times, for example, for the New Year.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Nowadays, hardly any adult lives without some amount of credit card debt. To help focus on your goal of financial freedom, read these 7 simple steps to pay off your debt more quickly and to make smarter spending choices in the future:
1. Check your statements. Paying back credit card debt quickly will not happen unless an individual can figure out how to better manage their purchases made using these cards. A strategic spending plan is necessary to pay off debt and ensure that it does not pile up again in the future. Examine your credit card statements every month and make sure that every fee is essential.
If you are in debt, the first step should be to stop purchasing products with your credit cards. Once you successfully eliminate your debt, checking your statements regularly can prevent you from falling into the same traps that caused the credit card debt in your past. It also allows you to examine your spending habits to reduce your “non-essential” spending.
2. Begin by defining a target. It is fundamental to prioritize paying off the cards with the highest interest rates first. This strategy will save you countless amounts of money that you would be spending on the interest rates. Next, focus on other lines of credit, such as loans and overdraft fees. While it is easy to consistently run up balances in a relatively short timeframe, paying them back requires a great investment of time and self-discipline. Monitor the development of your payments constantly in order to stay on track while remaining encouraged to achieve your goals.
3. Request a lower interest rate. When the interest rate is higher on a credit card, it will take longer to pay off the debt if you only pay the minimum monthly installments. If these rates are simply impossible to manage, consider requesting a lower rate. The best way to achieve this is by calling your credit card provider’s customer service office and explaining your circumstances. Banks would rather you continue paying off the debt as opposed to losing you as a client, or worse, allowing you to default on the balance.
4. Payoff the expensive cards first. The faster an individual pays off high-interest balances, the less it will cost him or her in the long-term. Once one card is paid off, use the monthly surplus to pay higher installments on other credit cards or debit. Continue this process until you eliminate all debt.
5. Pay installments regularly. Credit card debts accumulate interest daily. It is not only important to pay installments regularly but paying more than the minimum payment whenever possible is crucial to spend less overall. Paying as much as you can each month may also lower the amount of interest, which can save you a significant amount of money. Focus on the big picture; paying more than the minimum payment may make your monthly budget tight for a period of time but it will save you money in the end.
6. Budgeting. Budgeting is one of the best ways to save money and pay off credit card debt quickly. It is good practice to regularly examine your monthly costs and search for chances to cut down on your expenses. Devising a monthly strategy through a budget will expedite the debt relief process.
7. Cancel the credit card. If your credit card debt becomes impossible to manage, cancel the card to prevent the temptation to use it while it still has debt. After canceling, continue to pay monthly installments to protect your credit history and minimize interest.
If you are focused on eliminating credit cards and other debts and are thoughtful in your spending, you will have a greater likelihood of living a more stress-free life.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Essential Shift Change Procedures for Retail Success
Retail shift change procedures are systematic processes that maintain operational continuity through standardized handovers, task documentation, and communication protocols between departing and incoming staff members. These procedures include shift briefings, inventory counts, cash reconciliation, customer service transitions, and security checks that prevent information loss and service disruptions during employee changeovers.
As the founder of Complete Controller, I’ve witnessed firsthand how poor shift transitions can devastate retail profitability – in fact, 73% of retail operational errors occur during these critical handover periods when communication breaks down. Over my 20 years helping businesses streamline their operations, I’ve discovered that retailers implementing proper shift procedures reduce errors by 67% while boosting customer satisfaction scores during peak transition times. This guide reveals the exact shift change systems that successful retailers use to maintain seamless operations, improve team performance, and create exceptional customer experiences that drive repeat business.
What are essential retail shift change procedures?
Retail shift change procedures are structured systems for transferring operational responsibilities, critical information, and service standards between employee shifts
They include handover protocols that document completed tasks, pending issues, and customer interactions requiring follow-up
Communication standards establish verbal briefings, written logs, and verification processes to prevent information gaps
Quality control measures incorporate inventory checks, cash counts, and equipment inspections during transitions
These procedures reduce operational errors by 67% and maintain consistent service quality throughout all operating hours
The Foundation of Effective Retail Shift Management
Creating successful shift change procedures starts with recognizing that transitions impact every aspect of retail operations – from customer service quality to inventory accuracy. Most retailers focus primarily on basic scheduling without considering how information flows between teams or how responsibilities transfer seamlessly. The foundation encompasses communication protocols, role definitions, and accountability measures that maintain consistency regardless of which team members are working.
Effective retail shift management requires systematic approaches addressing both immediate operational needs and long-term business objectives. Studies indicate that stores with structured shift procedures experience 45% fewer customer complaints during busy periods and maintain more consistent sales performance throughout operating hours. This foundation includes establishing clear communication channels, defining specific responsibilities, and creating verification processes that confirm critical information transfers accurately between shifts.
Building your retail staff shift planning framework
The framework for retail staff shift planning must balance operational requirements with employee capabilities while maintaining service excellence. Successful retailers understand that planning extends beyond basic scheduling to encompass skill matching, coverage optimization, and contingency preparations for unexpected situations. This framework should analyze peak customer periods, inventory management needs, and specific skill requirements for different operational tasks.
Modern retail environments demand flexible shift planning that adapts to changing customer patterns, seasonal fluctuations, and staffing challenges. The most effective frameworks incorporate real-time sales data, customer traffic patterns, and operational demands to create dynamic scheduling that optimizes labor costs and service quality. This strategic approach transforms retail workforce planning from an administrative burden into a competitive advantage.
Developing Comprehensive Shift Handover Protocols
The handover process represents the critical moment when operational responsibility transfers between teams, making standardized protocols essential for preventing costly mistakes. Effective shift handover procedures capture completed tasks, pending responsibilities, and critical context about customer interactions, inventory issues, and operational challenges that could impact the incoming shift’s success. These protocols must be detailed enough to prevent oversights yet efficient enough to complete quickly during busy periods.
Research shows that stores implementing structured handover protocols reduce operational errors by 58% and improve customer satisfaction scores during transition periods. These protocols should include standardized documentation formats, mandatory verbal communication requirements, and verification processes confirming that important information is transferred accurately. The handover becomes particularly crucial during high-traffic periods when operational demands intensify and margins for error decrease significantly.
Developing retail shift change policy examples requires balancing operational stability with employee flexibility. Successful policies address request procedures, approval criteria, advance notice requirements, and consequences for violations while accommodating legitimate employee needs. These policies must maintain operational predictability while fostering employee satisfaction through fair and transparent scheduling practices.
The most effective shift change policies incorporate clear communication channels, defined approval workflows, and emergency contingency procedures. Case studies demonstrate that well-structured policies reduce administrative burden on managers while empowering employees to manage scheduling needs within established parameters. This approach creates engaged workforces while maintaining the operational consistency customers expect.
Optimizing Retail Shift Scheduling Through Technology Integration
Modern retail operations increasingly rely on sophisticated scheduling technologies that optimize staff allocation based on historical data, predicted traffic, and individual capabilities. These systems enable retailers to move from reactive scheduling toward predictive models that anticipate operational needs and adjust staffing proactively. Technology integration in retail shift scheduling creates opportunities for efficient operations while improving work-life balance through schedule predictability.
Technology also enables real-time communication and adjustment capabilities, allowing managers to respond quickly to unexpected demand changes or staffing availability. Advanced scheduling platforms automatically identify coverage gaps, suggest optimal reassignments, and maintain labor law compliance while minimizing administrative overhead. This technological transformation converts retail workforce management solutions from manual processes into strategic operational advantages.
Implementing how to manage retail shifts effectively systems
Learning how to manage retail shifts effectively requires understanding both human and technological elements contributing to operational success. Effective shift management systems incorporate predictive analytics, real-time communication tools, and performance tracking capabilities, enabling continuous improvement in operational efficiency. These systems must accommodate retail’s dynamic nature while maintaining service delivery consistency.
Implementation of effective shift management systems requires comprehensive training programs, helping team members understand their roles within the larger operational framework. Research indicates stores with well-trained staff on shift procedures experience 34% fewer scheduling conflicts and maintain higher customer satisfaction during peak periods. This systematic approach creates operational excellence cultures extending beyond individual shifts to overall business performance.
Best Practices for Retail Shift Changes That Drive Results
Implementing best practices for retail shift changes requires understanding how different operational elements interact during transitions. Successful retailers recognize that shift changes impact every store aspect, from customer service to inventory accuracy, making systematic practices essential for addressing interconnected challenges. These practices must adapt to different store formats, customer demographics, and operational requirements while maintaining quality and consistency principles.
Effective practices incorporate continuous improvement mechanisms, allowing retailers to refine procedures based on operational data and team feedback. High-performing retail operations studies reveal that stores implementing structured improvement processes achieve 42% better performance metrics in customer satisfaction, inventory accuracy, and employee retention. This approach transforms shift changes from potential vulnerabilities into enhanced performance opportunities.
Mastering changing shifts in retail through process excellence
Mastering changing shifts in retail requires developing process excellence encompassing every transition aspect. This includes creating standardized procedures for common scenarios, establishing escalation protocols for unusual situations, and implementing quality control measures maintaining consistency across shift combinations. Process excellence also requires regular evaluation and refinement based on operational outcomes and feedback.
The journey toward process excellence involves creating accountability measures, encouraging team ownership of successful transitions. Retail operations studies indicate stores with strong accountability cultures experience 28% fewer operational errors during shift changes and maintain consistent service quality throughout operating hours. This cultural element becomes equally important as procedural frameworks in achieving long-term success.
Case Study: Transforming Shift Management at Regional Fashion Retailer
A mid-size fashion retailer with twelve locations experienced significant operational challenges from inconsistent shift procedures across stores. Customer complaints increased 23% during transitions, inventory discrepancies occurred 40% more frequently after shift changes, and employee turnover reached 67% annually due to chaotic handover frustrations. Management recognized their decentralized approach created costly inefficiencies and negative customer experiences.
The transformation began with standardized shift handover protocols including digital documentation requirements, mandatory verbal briefings, and quality verification checklists. Within six months, the retailer achieved remarkable improvements: customer complaints during transitions decreased 54%, inventory accuracy improved 38%, and employee turnover dropped to 31% annually. This success demonstrated how systematic shift procedures deliver measurable business results while improving satisfaction and experience.
Financial Impact and ROI of Proper Shift Procedures
The financial implications of effective shift change procedures extend beyond implementation costs, creating substantial value through improved efficiency and reduced errors. Retailers implementing comprehensive shift management systems typically see returns within 4-6 months through reduced labor costs, decreased inventory shrinkage, and improved customer retention. These financial benefits compound as operational improvements create sustainable competitive advantages in service and reliability.
From my experience with Complete Controller’s retail clients, I’ve observed stores with proper procedures achieve 23% lower operational costs compared to ad hoc approaches. Cost reductions come from multiple sources: decreased error correction time, reduced inventory losses, improved staff productivity, and enhanced satisfaction leading to increased sales. Investment in procedures typically pays for itself within the first quarter through operational performance alone.
Calculating the true cost of poor shift management
Hidden costs of inadequate shift management often exceed obvious expenses, creating substantial financial drains many retailers fail to recognize. Beyond direct costs like overtime, inventory discrepancies, and service failures, poor management creates ripple effects impacting brand reputation, employee retention, and customer relationships. These indirect costs can represent 40-60% of total financial impact from operational inefficiencies.
Comprehensive cost analysis should include factors like increased training expenses from high turnover, lost sales from dissatisfaction, regulatory compliance risks from inadequate documentation, and opportunity costs of management time resolving preventable issues. When retailers calculate comprehensive costs, the business case for investing in procedures becomes compelling, with potential savings often exceeding 15-25% of operational expenses.
Conclusion
Implementing essential retail shift change procedures represents one of the most impactful investments retailers can make in operational excellence and long-term success. Throughout my years helping retailers optimize operations, I’ve consistently seen stores with systematic procedures outperform competitors in customer satisfaction, employee retention, and financial performance. These procedures provide roadmaps for transforming shift changes from operational challenges into competitive advantages driving sustainable growth.
The journey toward shift management excellence requires commitment, systematic implementation, and continuous refinement, but returns justify this investment many times over. Retailers embracing these procedures position themselves to thrive in competitive marketplaces while creating better experiences for customers and employees. For expert guidance implementing these procedures and optimizing your retail operations, visit Complete Controller to discover how our team can support your operational transformation journey.
Frequently Asked Questions About Retail Shift Change Procedures
What are the most important elements of retail shift change procedures?
The most critical elements include standardized handover protocols, clear communication channels, documentation requirements, quality verification checklists, and accountability measures that maintain consistent execution across all shifts and staff members.
How long does it typically take to implement new shift procedures?
Most successful implementations follow a 90-day timeline including assessment, pilot testing, full rollout, and refinement phases. However, simpler procedures can be implemented more quickly while complex integrations may require additional time.
What technology solutions work best for retail shift management?
The most effective solutions combine scheduling software with communication platforms and documentation systems that integrate with existing point-of-sale and inventory management systems to create seamless operational workflows.
How do proper shift procedures impact customer satisfaction?
Retailers with structured shift procedures typically see 20-30% improvements in customer satisfaction scores during transition periods, primarily due to better service consistency and reduced operational errors affecting customer experience.
What are common mistakes retailers make with shift change procedures?
The most frequent mistakes include inadequate training, inconsistent implementation across locations, failure to document procedures clearly, lack of accountability measures, and not adapting procedures to accommodate operational changes over time.
Sources
ShiftLab. “Shift Swapping: Effectively Managing Shift Swaps in Retail Organizations.” ShiftLab Blog, 20 Aug. 2024, www.shiftlab.io/blog/shift-swapping-best-practices-for-managing-shift-swaps-in-retail-organizations.
Workhint. “The Secret to Retail Shift Management They Don’t Want You to Know.” Workhint Blog, 13 Apr. 2025, blog.workhint.com/blog/the-secret-to-retail-shift-management-they-dont-want-you-to-know/.
Shyft. “Mastering Shift Changes for Seamless Employee Scheduling.” MyShyft Blog, 10 Mar. 2025, www.myshyft.com/blog/managing-shift-changes/.
TimeWellScheduled. “Shift Changes – Policies and Best Practices.” TimeWellScheduled Blog, 30 Jun. 2022, timewellscheduled.com/blog/shift-changes-policies-and-best-practices/.
Go1. “Employee leaving? Here’s the process for writing a solid handover.” Go1 Blog, 16 May 2025, www.go1.com/blog/importance-handovers-exiting-employees.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Jennifer BrazerFounder/CEO
Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.
Brittany McMillen is a seasoned Marketing Manager with a sharp eye for strategy and storytelling. With a background in digital marketing, brand development, and customer engagement, she brings a results-driven mindset to every project. Brittany specializes in crafting compelling content and optimizing user experiences that convert. When she’s not reviewing content, she’s exploring the latest marketing trends or championing small business success.
Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.
Unlocking Cash Flow Statement Importance for Business Success
Cash flow statement importance lies in its ability to reveal your business’s true liquidity position, operational efficiency, and long-term viability through tracking actual cash movements rather than just paper profits. Without this critical financial tool, even profitable businesses can fail due to cash shortages—a reality that claims 82% of failed businesses according to recent U.S. Bank data.
In my two decades leading Complete Controller, I’ve witnessed how cash flow mismanagement can cripple thriving businesses overnight. One client, a profitable restaurant owner, couldn’t pay suppliers because he tracked profits but ignored cash flow cycles—until we implemented a simple weekly cash flow statement that transformed his financial chaos into control. This experience taught me that cash flow isn’t just accounting; it’s the oxygen sustaining your business. In this article, you’ll discover how to master cash flow analysis, overcome common SMB cash challenges, and leverage advanced forecasting techniques to transform your business from surviving to thriving.
What is cash flow statement importance and why does it matter for your business?
Cash flow statement importance centers on revealing liquidity risks, operational inefficiencies, and growth capacity that income statements obscure
Operational Insight: Uncovers revenue and expense patterns like seasonal slumps and client payment delays for proactive decision-making
Debt Avoidance: Highlights cash reserves to prevent high-interest borrowing and renegotiate supplier or lender terms
Strategic Agility: Enables seizing opportunities such as equipment purchases or market expansions without disrupting operations
Risk Mitigation: Acts as an early-warning system for cash shortfalls, allowing preemptive cost-cutting or funding arrangements
The Anatomy of a Cash Flow Statement: Beyond the Basics
Understanding cash flow statements requires mastering three distinct components that work together to paint your complete financial picture. Each section tells a different story about your business health, and missing any piece leaves dangerous blind spots in your financial strategy.
Operating activities form the heartbeat of your cash flow statement, detailing cash generated from core business operations like customer payments and supplier expenses. This section distinguishes truly profitable operations from superficial revenue gains. For instance, a consulting firm discovering consistent 60-day client payment delays through operating cash flow analysis can renegotiate contracts to 30-day terms or implement staged payment structures, immediately improving liquidity without changing revenue.
Operating activities: The core pulse
The operating activities section reveals whether your business generates sufficient cash from its primary purpose. Key metrics include:
Customer collections timing versus expense obligations
Working capital changes affecting daily operations
Non-cash adjustments like depreciation that impact reported profits
Operating Cash Flow Ratio (OCF ÷ Current Liabilities) targeting above 1.0
Investing activities: Fueling growth
Investing activities track cash used for long-term assets or gains from asset sales. Negative cash flow here often signals growth investments rather than distress—a bakery purchasing new ovens to triple output shows healthy expansion. Conversely, frequent asset sales might indicate underutilized resources or emergency liquidity needs.
Financing activities: The capital engine
Financing activities cover equity and debt transactions including loans, investor funding, and dividend payments. A tech startup’s $500,000 investor influx supports R&D initiatives, while consistent debt repayments reduce leverage risks and improve creditworthiness. This section reveals funding stability and shareholder return patterns.
Real-World Case Study: From Crisis to Control
StrategyPlus, a mid-sized consulting firm with $5 million annual revenue, faced severe cash flow gaps despite 20% profit margins. Their story illustrates how cash flow analysis transforms business trajectories.
The challenge: Erratic cash flow hindering growth
StrategyPlus struggled with 60-90 day client payment terms while facing immediate supplier and payroll obligations. Despite profitable contracts, this timing mismatch prevented hiring key talent and upgrading project management systems. Cash reserves dwindled to one week of operating expenses by month six.
The solution: Data-driven interventions
Through detailed cash flow statement analysis, StrategyPlus identified three actionable insights:
Client Payment Patterns: Government clients paid within 90 days while tech startups paid within 30 days
Seasonal Variations: Q4 showed 40% higher collections due to client budget cycles
Expense Timing: Fixed costs consumed 60% of monthly cash regardless of revenue timing
Armed with this data, management negotiated 30-day payment terms with slow-paying clients or required 25% upfront deposits. They also shifted discretionary spending to align with Q4 cash surges.
The outcome: Secured growth
Within six months, cash flow gaps decreased by 40%, enabling a $50,000 investment in AI-driven project management tools. Quarterly revenue grew 25% as improved cash flow allowed accepting larger projects previously declined due to working capital constraints. The firm now maintains three months of operating cash reserves.
Cash Flow Challenges Unique to Small Businesses
Small businesses face distinct cash flow obstacles that larger corporations easily navigate. Understanding these challenges—and their solutions—can mean the difference between growth and closure.
The invoice lag trap
Small businesses often accept 30-90 day payment terms to win contracts, creating dangerous liquidity gaps. When a marketing agency waits 60 days for a $20,000 invoice while paying designers weekly, cash disappears fast.
Solutions that work:
Invoice factoring provides 80% cash upfront for a 2-3% fee
Staged project payments break large invoices into weekly milestones
Early payment discounts (2/10 net 30) incentivize faster collection
Automated payment reminders reduce collection time by 15 days average
Seasonal volatility: Planning for peaks and valleys
Retailers experiencing 70% of annual revenue during holidays must stretch November-December cash through slower months. A lawn care business faces opposite challenges with summer revenue funding winter overhead.
Cash flow forecasting for seasonal businesses:
Calculate monthly cash needs during slow periods
Set aside 15-20% of peak season revenue for off-season expenses
Negotiate seasonal payment terms with understanding suppliers
Consider complementary services to smooth revenue cycles
Step-by-Step: Building Your Cash Flow Statement
Creating an accurate cash flow statement doesn’t require an accounting degree—just systematic data gathering and the right approach.
Direct vs. indirect method
Criteria
Direct Method
Indirect Method
Complexity
High (tracks each transaction)
Low (adjusts net income)
Time Required
3-4 hours monthly
1-2 hours monthly
Accuracy
Exact cash movements
Close approximation
Best For
Daily cash management
Monthly/quarterly reporting
Most small businesses benefit from the indirect method’s efficiency while maintaining sufficient accuracy for decision-making.
Common pitfalls and solutions
Three mistakes derail most cash flow statements:
Omitting Non-Cash Items: Forgetting depreciation inflates operating cash by thousands
Misclassifying Activities: Labeling loan payments as operating expenses distorts analysis
Ignoring Timing Differences: Recording sales as cash before collection creates false security
Modern accounting software like QuickBooks or Xero automates proper categorization, reducing errors by 90%.
Beyond the Basics: Advanced Cash Flow Forecasting
Static cash flow statements show history—forecasting reveals your future. Advanced techniques transform reactive businesses into proactive market leaders.
Rolling forecasts: Agility in uncertainty
Traditional annual budgets become obsolete within months. Rolling 12-month forecasts updated quarterly incorporate real-time data for accurate predictions. A manufacturer adjusting inventory purchases based on supply chain delays maintains optimal cash levels despite market volatility.
Cash flow KPIs every leader should track
Cash Conversion Cycle (CCC): Days Inventory + Days Receivable – Days Payable (Target: Under 45 days)
Cash Flow Margin: Operating Cash Flow ÷ Revenue (Industry-specific but 15%+ is strong)
Final Thoughts
Cash flow mastery transforms business owners from financial firefighters into strategic architects. By implementing systematic cash flow analysis, you gain the visibility and control needed to navigate challenges and capitalize on opportunities.
Throughout my journey building Complete Controller, I’ve helped over 500 businesses turn cash flow nightmares into success stories. The difference between those who thrive and those who merely survive always comes down to one factor: understanding and optimizing cash flow before crisis strikes.
Your business deserves the competitive advantage that comes from professional cash flow management. The experts at Complete Controller specialize in implementing customized cash flow systems that fit your unique business model. Contact us today at Complete Controller to discover how proper cash flow management can unlock your business’s true potential.
Frequently Asked Questions About Cash Flow Statement Importance
What is the main purpose of a cash flow statement?
The main purpose is tracking actual cash movements to assess liquidity, operational efficiency, and financial flexibility—revealing whether your business can meet obligations regardless of reported profits.
How often should I prepare a cash flow statement?
Prepare cash flow statements monthly for active monitoring and weekly during growth phases or cash crunches. Quarterly statements work for stable, mature businesses with predictable cycles.
Can a profitable business have negative cash flow?
Yes, profitable businesses often experience negative cash flow when cash gets tied up in inventory, equipment purchases, or uncollected receivables—highlighting why cash flow tracking is essential.
What’s the difference between direct and indirect cash flow methods?
Direct method lists actual cash receipts and payments for precision, while indirect method starts with net income and adjusts for non-cash items—offering efficiency for regular reporting.
How does cash flow differ from profit?
Profit represents revenue minus expenses on paper, while cash flow tracks actual money moving in and out—a business can show profits while lacking cash to pay bills.
Sources
British Business Bank. (2024). “Cash Flow Management.” www.british-business-bank.co.uk/finance-hub/cash-flow-management
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
PCI compliance should never be separated from general security efforts
A lot of enterprises make the mistake of excluding PCI from their security program. This would be a big mistake. Be aware that PCI is a data security standard. It does not make sense to separate a framework designed to test the reliability of an organization’s security program, specifically when it comes to card payment data protection. This tactic is faulty and reflects how PCI has been misinterpreted and misapplied. The article below breaks down everything you should know.
You can make a lot of difference by choosing the right QSA (Qualified Security Assessor)
Businesses should hire PCI assessors with information security experience and understand the requirements of card payment industry security. Possible conflicts of interest can occur if a QSA company also provides remedy services and additional managed security services. While some reputable organizations fit this example, ask yourself whether the purpose of the QSA is to have the best security interests of companies in mind, or they just want to upsell additional services.
Focusing on the requirements of the PCI DSS (Data Security Standard)
A lot of suggestions in the PCI DSS make sure that you can avoid being the victim of a breach and are secure. For instance, PCI highly recommends segmenting cardholder data. It requires controls that monitor and limit network traffic from back-office systems and POS (point-of-sale) registers to be implemented. If you are not following this, you are both insecure and non-compliant (regardless of the amount you have paid to be compliant.)
Acquiring and Implementing tech tools is not enough — you should understand them.
An automated review of all system logs is required by PCI for the detection of any malicious activity. As a result, a large quantity of analytics/automation tools that claim to be the ultimate solution exists. While analytics and automation may be necessary, getting and executing them is useless if you and your IT team have not tried to understand what is being observed and reported.
Some of the most secure networks are those where specific teams are responsible for thoroughly understanding their network, the data flows and business processes, and the operations as a whole. This will make sure they can point out anomalous behaviors.
Having a professionally trained and highly valued security analyst team
Understandably, it can be challenging to find individuals like these. They are generally not motivated by the same thing as others, that is to say, they do not work solely for the paycheck. Most of the time, they care more about appreciation and recognition, not specifically from the management or from within the company, but from the peers in the community as a whole.
The PCI attempts to create a qualification standard for such individuals. It requires the operational processes to be assigned to specific roles/individuals– people who get acceptable continued training in their field. Aside from that, specialized yearly training is required for those who have responsibilities that involve handling incidents. They must learn the proper way to analyze and react to events and incidents.
A lot of merchants have their security monitoring tasks outsourced to outside providers. The question is, how can they know for sure that their selected provider has adequate staff, or whether they are trained to detect and review irregular behavior (instead of waiting for an automated alarm to go off)? Outsourcing the responsibility of your company’s network security to a third party means putting the life of your company in an outsider’s hand. If a financial need exists, ask yourself whether it will ultimately be cost-effective.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
The government of the state guides an investment policy. The government promotes the investment policy in its rules and regulations that also helps the economy of the state. Some governments encourage foreign investment policy, and some discourage the same foreign policy to contribute to the economy of their nation. Investments help an individual to support financial independence. They also help people to achieve their financial goals.
There are types of investments that have their own general set of features, from bank products to stocks or bonds. All are different and useful in their own ways. These investments have risk factors, as well. But all these types can be used differently by investors. The main types of investments are:
Bank Products
Stocks
Bonds
Investment Funds
Annuities
Security Future
Retirement
Commodity Future
Life Insurance
Bank Products: Banks provide a safe and convenient way to build up savings. And so do the credit unions. Some banks offer amazing services that help individuals to manage money. Depositing money will always remain one of the best ways to save money. Credit unions work the same way with some different features. Some banks offer a service with the transaction that provides liquidity, making it easy for people to get funds for unexpected events or urgent needs. The liquidity process converts an individual’s assets into cash with permission.
Stocks: It is considered that when someone invests in a stock, they become the owner of a corporation. Stocks represent ownership shares that are also known as equity shares. Equity shares are often the primary source of income for specific firms. The loss and profit in stocks are connected to the success and failure of a firm or company. It also depends on the type of stock a person owns, and what is the overall stock market rates. Stock and stock mutual funds are an important component for people to save money if they own a company or business. There are also various types of stocks.
Bonds: A bond is a type of loan that is taken by an investor for a corporation, federal agency, government, etc. This loan is made in exchange for interest payments for a specified period. The repayment of this loan has its own specified date. There are so many different types of bonds or loans that are treasuries, corporate bonds, agency bonds, municipal bonds, etc. Municipal bonds are the most common and used ones. Whenever someone invests in bonds, they have a higher risk of losing their money, especially in an individual bond. The bond mutual fund prices change, just like the prices of stocks in the stock market. The risk factor in bonds depends on the type of bond an individual owns.
Investment Funds: Investment funds are remarkably effective for investors in various ways. Investors need to invest according to a proper strategy in these funds. These funds include mutual funds, exchange-traded funds, closed-end funds, and unit investment trusts. All funds have different features. Investment funds provide professional and diversified strategies. It also helps in managing the financial situation of a company efficiently and adequately. As with any other kind of investment, investment funds also have their risk factors that need to be addressed before applying for this fund. The main risk in all sorts of funds is the fear of losing money. A person should be optimistic while applying for any fund. It does not matter how the previous fund performed; the future is always bright.
Annuities: An annuity is another form of investment where a person buys it entirely or with a series of payments known as ‘premiums. An annuity is a kind of a contract. This contract is often between an individual and a firm or company. In annuities, the company makes strategized funding or payments to the specific individual. An annuity is another form of investment where a person buys it entirely or with a series of payments known as ‘premiums. Some people save annuities for retirement while others turn it into a retirement income.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Risk management is the process of establishing value to reduce the negative effects caused by risks in a business. Every business must be aware of potential risks and remain proactive in managing them. Risks include financial difficulties in a business or company and require financial decisions. They frequently occur in almost every business, making it difficult to deal with certain financial issues and situations. The awareness, study, and action required to appropriately deal with uncertain situations is the essence of risk management.
Risk management may occur when potential losses in investments are planned, and an investor takes proper action to reduce or mitigate them. It can also occur when a fund manager attempts to quantify the potential of the losses and then takes proper action to tolerate the risk further.
Inadequate risk management may lead to a total loss for the companies that carry out the wrong strategies or apply the right ones to the wrong circumstances. Suffering from a financial risk can become a serious hindrance for growing fast businesses because this can be detrimental to that growth.
Most people think of risk from a negative perspective. Risk occurs when there is a lack of performance. To avoid long-term risks, companies start by addressing their short-term risks in a positive and effective way. The phrase, “No pain, no gain!” fits well here. To have a successful business, one must take on some risks, whether short-term or long-term. These short-term risks are called volatility. The volatility level depends on the risk tolerance of a company and is based on specific financial circumstances. One measurement of volatility considers the assumption of the capacity of the risk tolerance of a business.
To address certain risks, businesses or industries must make proper decisions. These companies recognize four aspects of risks and apply them to the management process. These include general process, implementation process, technical aspects, and examples of application. To begin the process of decision-making for a business or company, one should find and characterize potential threats. These risks must be determined and understood in order to make any further plans. An individual should know which risk has a long-term effect and which one has a short-term effect. This is how potential risk factors are identified.
The analysis process has two separate categories, referred to as source analysis and problem analysis.
All risks are related to specific identifiable threats through which the proper analysis process can be applied.
Once the risks have been identified, they must be assessed properly. This process is also known as the measurement process. In this case, one must measure the losses of a company or business throughout the years. The assessment process is the area of risk management where people often make the most mistakes. It should be a top priority because you can begin the implementation and final decision processes after accurately assessing the risk.
To make appropriate decisions, a company needs to have experienced staff such as financial advisers, investors, and management. A company meeting is a preferable way to strategize because the staff is aware of the finance history of the business, particularly the budget.
The last step is implementation. The timeline for the implementation process depends on the plan. Sometimes it requires an ongoing process to reduce risks in the future. However, sometimes, the period is shorter due to a business only requiring short-term solutions.
Sometimes companies transfer their risk management issues to outside agencies that offer advanced risk management guidance. These companies are also known as risk management insurance companies. Whether done internally or externally, risk management should be a priority of every successful company or business.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Chances are at some point in your life you will need to rent a storage unit. Whether it be to temporarily hold household or business items while moving or a longer-term storage need, there is an art to renting the right unit. Before renting a storage unit, you must consider size, location, convenience, and for those who take their budget bookkeeping seriously, the cost. There are other considerations as well, which will be addressed below.
Full Service or Self-Storage?
The first thing to consider is whether you want to deal with your valuables, or you want someone else to handle it for you. This will also factor into your cost. While full service is undoubtedly easier, it is also more costly as essentially you will have movers come to pack, move, and store your items. Self-storage is far less expensive but will require you to do all the work. When making this decision, you will need to do a bit of bookkeeping to see if this will fit into your budget.
Climate Controlled?
One of the first questions you need to ask is what you plan to store. Some items will not require the temperature to be regulated. However, electronics and some other equipment or materials will react poorly to heat, cold, or humidity. This also will be a matter of cost, climate-controlled units or facilities are higher in cost.
Location?
When deciding on your storage unit, the location should be considered. The main question you need to ask yourself is whether you need to access this unit regularly or rarely. If you need to get to the items being stored often, you will want a location that is close and easy to access. If you will rarely need to access the items, the location won’t be important and can be chosen based on cost. Another factor to consider is hours of accessibility. Some facilities have 24-hour access, where others may have limited hours. These factors all need to be considered when choosing the location of your storage unit.
Does size matter?
While all the decisions when renting a storage unit are important, choosing the size is perhaps the most important. You have to factor in cost, what will be stored, and ease of access. If you plan to simply store your household or business items temporarily or don’t need to have access to the items, you can rent a unit that can be tightly packed. But if you will need to access items, you will need a storage unit that allows you to move among them easily. Coming back to your budget, you will need to consider the cost. If you consult your bookkeeping tool and find that you don’t have a lot in the budget for a storage unit, you may decide to get a smaller unit and store less.
The Bottom Line?
Renting a storage unit is a common need in life. Making the right decisions when taking this on can keep it low cost and convenient. If you are careful in your choices, you can store your keepsakes without breaking your bank account.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
