Leading a successful business means knowing your way around the market and investments. Knowing how and when to sell your product can make a difference between successful and unsuccessful companies. But no matter how confident you are in the business model, you’ll still need some proof.
A profit and loss statement provides insight into how much you gain and lose from your product or service. It is crucial that you obtain it at some point and continue generating it on a monthly or quarterly basis. If not, you’re basically running a business on blind faith.
What is a Profit And Loss Statement Exactly?
If you’re new to entrepreneurship or have never worked in a company before, you’re probably wondering what a profit and loss statement is. It’s not a fancy term that refers to an action completely illogical and opposite to what it sounds like. It is pretty self-explanatory. A profit and loss statement is a document that shows revenues, costs, and expenses during a specific period. In simple terms, it shows how much you’ve gained vs. how much you spent with your business model.
The selling price of your product will always be affected by other expenses. You’ll need a myriad of services, including advertisement and marketing, product placement, etc, to actually sell it. To keep track of these expenses as well as gains, you’ll need a profit and loss sheet.
This statement includes:
-
The Income
This refers to the total amount you received from your rendered services or sold products. It does not include any expenses or depreciation of your product. So bear in mind that it’s not the final number that you’ll get from your products/services.
-
Cost of Goods Sold
This refers to the carrying value of the products sold over a specific period. Carrying value is the same as book value. It’s just a term used in accounting, so don’t get confused over it.
-
Gross Profit
In short, it is the amount you’ll get minus the production and all associated expenses, as well as selling expenses. To get gross profit, you’ll have to deduct the cost of goods sold to profit or income.
-
Expenses
This relates to all the expenses combined that your company had, which are related to the process of selling the product or rendering services.
-
Net Operating Income
This is the annual income you get, minus all the above-mentioned deductions and expenses. Everything, from the cost of production and sales to depreciation costs and other similar expenses, is already included and subtracted in the net operating income.
-
Net Income
Before you get to the number of net income, you’ll have to add “other income” and “other expenses,” which include everything that you earned or spent extra on the process of advertising, selling, and production.
Is Outsourcing Profit and Loss Statement Possible?
Now that we know what this entire statement (as well as everything that’s included in the list) represents, it’s time to move on to another topic. If these numbers, calculations, and accounting, in general, confuse you, it’s best to leave them to your employers. But what if you don’t want to acquire a profit and loss statement from your accounting team? Is the profit and loss statement outsourcing an option?
The answer is – yes, it definitely is. More importantly, hiring a company to generate a monthly, quarterly, or annual profit and loss statement might be advisable if you’re running a large business. Because your accounting department has enough on its hands, it may provide inaccurate statistics. Leaving this matter to someone outside your company allows you to get precise info on your profit and loss over a specific period.
Another reason to consider outsourcing when generating this type of statement is to mitigate fraud. Almost every miscalculation can be justified as human error. We all make mistakes. However, if the issue persists and your expenses start to pile up, it’s likely that someone is intentionally making a mistake.
How to Outsource the Profit and Loss Statement
When it comes to acquiring any services related to calculating your revenue and expenses, it’s best to stay safe. To do this, you should check the company’s reputation, its business history, and its expertise. Because you’re trying to outsource the profit and loss statement, it’s crucial that you pick the right partner. Here are a couple of steps to help you choose the right one.
-
Create a Clear Workload
Before selecting an outsourcing partner, you should first identify the specific services you require. To do this, you should write a clear scope of work. This way, you’ll identify your company’s needs, as well as the means of solving your problem. Because you need a profit and loss statement, make sure to include the type of access they’ll have to your files, and list them by priority.
-
Expertise and Requirements
Expertise should be a top priority. During your hiring process, be sure to emphasize the level of expertise you expect from your future partner company. This way, you’ll set things clear from the start, and there won’t be room for disappointment in the future.
-
Their Reputation
A company’s ability to deliver specific services effectively is closely tied to its reputation in the market. Everyone can secure a great business deal and successfully complete it, leaving the employer satisfied. However, if a company consistently provides impeccable services over a long period, people will recognize its name. If you’re looking for a great outsourcing partner, it’s wise to focus on their reputation above all else.
-
The Budget
When it comes to your budget and how much you intend to spend on acquiring the aforementioned services, you should be quite transparent. This will allow you to have clear communication and avoid any unnecessary misunderstandings. Furthermore, the company you’re trying to hire will put more or less effort into proving they’re the right choice, depending on your budget. So pick the right number for the volume of work that you require, and be clear to specify any bonuses or benefits related to partnering with you.
-
Data and Intellectual Property Privacy
Because you’ll be sharing sensitive information with your future partner, it’s recommended that both parties sign a nondisclosure agreement. Before sharing any data, ensure that it is protected. The companies that you’re reaching out to should be of impeccable reputation, but you should never risk it with these things. A small mistake can prove to be quite costly for your business, as you aren’t aware of your competition’s goals as well as their means.
Here at Checkissuing, we have extensive experience in reliably sending payments and documents, as well as outsourcing check writing. If you think we can help you out, don’t hesitate to contact us today.
Last updated: September 2025