Propeller Industries

Tips For Successful Year-End planning: Part 2

The Importance Of Tracking Your Actuals

Alyssa Adams

Alyssa Adams

Chief Financial Officer

December 16, 2021

It’s important to look back in order to plan ahead. Do you know how your actuals are being tracked? Is your information up to date and complete? Can you tell how your business is performing by looking at your books? These are critical questions to ask before you start your year-end planning.

Using Your Actuals as Part of the Planning Process

Using your actuals in the planning process allows you to view your progress over time and can help you inform where you are going. Clean actuals will give you a good understanding of your gross margin and contribution margin and will allow you to understand how much room you have to invest in fixed expenses such as headcount.

Avoid an Unorganized Chart of Accounts 

One mistake we often see in new clients to Propeller is an unorganized chart of accounts. Many people do not realize that Quickbooks actually allows you to customize your chart of accounts to be more meaningful to your business or industry. A good chart of accounts is organized by departments such as Operations, Sales, Marketing, and G&A, with sub-accounts under each. Your sub-accounts should capture enough detail that it provides a view into the cost drivers of each department, without losing the forest through the trees. Travel Expenses is a great sub-account. Travel by each individual in your company is too much detail.       

A clean chart of accounts in combination with accrual-based financials and complete and accurate information will help you determine what may be affecting your profit and highlight changes that need to be made for the future. It can also be used as the basis for your year-end planning. By planning in the same way your actuals are organized you can easily track progress against your plan as the year goes on.

Reach out to Propeller for more insight on year-end planning or to discuss any of your finance and accounting needs.

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