JIM: Too many small business people think their financials are sacred. That nobody can see them. They are not that big a deal and they are particularly not that big a deal when you are dealing with someone, in the case of a large vendor, they will carry you for 30 days. They'll give you net 30 day terms which in effect, I'm going to loan you money for 30 days they should be allowed to see your financials.

HATTIE: (Voiceover) Lacy Marlette has been Noel Hanson's CPA for over 10 years.

LACY MARLETTE: From their listing of cash receipts and cash disbursements, which has some detail in it, we are able to produce for them a balance sheet and a P & L and that's of some importance to them. What's more important is from that we can begin projecting out from a tax planning status where they are what they need to do in regard to salaries whether they're going to have a tax liability whether they are not how they can best plan for the year, whether they should do a pension plan.

HATTIE: (Voiceover) But now Noel can produce a balance sheet anytime.

NOEL: The coolest thing about this program is the fact that I can see on the front company page everything I need to know about the health of my business right now. I don't have to think any further than that. I can move on and do what I like to do best which is working directly one on one with my clients solving their problems.

HATTIE: If someone comes to an advocate, a CPA or a banker, they ought to come with their financials if they are asking for help, right?

JIM: Absolutely. Let's go back to a basic tenet here. You cannot impact the profitability of your company without doing one of three things: increasing sales, increasing gross margin, decreasing expenses. How do you know where the leverage is? What needs to be done unless you can see the figures that give you the relationship between all those figures?

JIM: What's the ratio of your current assets to your current liabilities? Do you know that number?

NANI: I don't.

JIM: You need to understand your balance sheet just as much as your P & L. It's more important than your P & L.

JIM: The P & L tells us what the results of our operations have been for the period covered. Financial statements should be monthly. So if this is March the 10th, we are going to kick out financials that show us what we did in the month of February. So a P & L says how much we sold, that's sales. The gross margin part of it is how much we made off of those sales. Then the expenses are what it cost us to provide all of the administration. Then there's bottom line -- which is where everybody goes -- they do know that figure. We all know if we go to the bottom line we say, "There's our net income, that's our profitability -- that figure there."

CHRIS: Profit's what we're in business for. Usually on the P & L I'm looking at labor costs or cost of goods. Especially on P & L you can see where all of your money goes. The only way to increase your profitability is decrease your costs and sell more products. That will increase your profit.

JIM: That figure, the bottom line on our P& L is a figure that's used to pay taxes on.

HATTIE: So depressing.

JIM: Hopefully we'll talk about cash flow. It is not cash. It is just a figure that we pay taxes on. But, it is important because taxes are important. But going back to the whole trend thing, it shows how we did in February compared to January and hopefully it also shows what we did compared to a year ago in February.

HATTIE: (Voiceover) The P & L gives us many numbers including cost of labor. Nance Yale is the office manager at Hanson and Company and she is happy to have new payroll tools.

NANCE: Every month I sent a payroll summary to an outside consultant who figures the taxes and sends it back to me and tells me how to fill out my little forms and I send it on. There are mistakes sometimes. Now I am able to do the process myself. I save the monthly expense and keep control in the office where I know it is being done right.