Clean versus clear financials

Clean versus Clear Financials | Do You Know The Difference?

What is the difference? I would classify clean financials as financials that follow GAAP (Generally Accepted Accounting Principals) and can be used for professional purposes. For example, taking them into a bank in order to apply for a business loan. Or using them while working with your tax preparer to file your income taxes with the IRS. These would be examples of clean financials. All of your accounting data is in the proper place on your financials.

Now let's talk about clear financials. Clear financials are more like management tools. Maybe they are used internally to determine gross margin on your products or services. Or maybe your clear financials are analyzed to better understand your business expenses and determine where you need to cut back spending.

Ideally, your accountant should be producing both clean and clear financials regularly. Business owners really need both. There is really a big difference between the two and without both sides of the equation, you as a business owner are really left with an incomplete picture. Sort of like having half a puzzle.

-Ryan

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