Have you ever read a set of financial statements and thought, “This feels unnecessarily complicated”? Trust us, you are not alone.
Lots of successful business owners – even those running companies with tens of millions in revenue – sometimes walk away from their own reports scratching their heads. The simple truth is that accounting is confusing.
This is not an accident.
A Profession Built on Complexity
The accounting profession and its standards bodies have spent decades building frameworks (GAAP in the U.S., IFRS internationally) that are technically precise but often impenetrable to non-accountants.
These frameworks exist for good reasons: consistency, comparability, accuracy. However, along the way, they have also created a labyrinth of terminology and rules that can make it ridiculously hard for the average business owner to get one simple answer: Are we actually making money?
Part of the issue is that accountants love precision, and that precision often means redefining everyday words into industry jargon.
Let’s Talk About Sales… Or Is It Revenue? Or Turnover?
Take something as seemingly straightforward as “sales.” You would think it means “the value of what we sold.”
But depending on the context, you might see it labeled as:
- Revenue (the preferred U.S. accounting term)
- Turnover (the British term)
- Income (sometimes used interchangeably in journalism or casual conversation, even though it usually means “profit” in financial statements)
- Billings
- Orders
To make matters more complex, what is counted as sales can vary.
For example:
- Are you recognizing sales when the customer signs the contract?
- When you invoice the customer?
- When you ship the product?
- When you deliver the services and/or product?
- When you receive payment?
Under accounting standards, timing depends on your revenue recognition policy, which itself depends on the nature of your business. Construction companies, SaaS providers, and retailers all recognize revenue differently.
So, when you read a headline saying, “The company made $10 million,” you have to pause. Is that net income after expenses? Operating profit? Or is it just total sales? Financial journalists (typically not accountants themselves) sometimes blur these lines, and that confusion trickles down to the way owners interpret their own numbers.
Why This Matters More for Businesses in the $3M-$50M Range
At this scale, companies are past “gut feel” decision-making. There are too many moving parts (inventory, payroll, vendor contracts, financing arrangements) to rely on guesswork.
If your reports are clouded in technical terms or presented without context, you can end up making decisions based on half-understood data. You risk overestimating profitability, underestimating cash needs, or misunderstanding which products or services are truly driving business performance.
How can you avoid this?
The CFO’s Role: Translating Complexity Into Action
One of the most valuable things a CFO does is act as an interpreter between accounting complexity and business reality.
A good CFO will:
- Strip away jargon and give you plain-English answers.
- Ensure your reports align with how you make decisions, not just compliance rules.
- Reconcile the “official” accounting picture with the operational metrics you care about, such as units sold, recurring revenue, customer acquisition costs, and so on.
Accounting will probably always be confusing – that’s baked into the way the system was built. But with the right guidance, it doesn’t have to be a barrier between you and smart, confident decision-making.
Ready for someone to stand by your side and help you make sense of the bigger financial picture? Get in touch.