Are You Reviewing These Financial Reports?
There are so many unknowns when it comes to running your business and your finances shouldn’t be one of them. I wrote this article to help you identify the main drivers of your business. So, let’s grab a coffee and dig into this to clarify the reports you should have up to date and easily accessible to measure how your business is performing. These reports provide important information that will help you pinpoint the area you need to focus on improving.
The Financial Reports You Need To Review To Keep An Eye On Your Business
You wouldn’t drive blindfolded and it’s important you don’t try to manage your business blindfolded either. You can measure your business performance on a weekly, monthly or quarterly basis based on your volume and model but what’s essential is doing it on a regular basis.
Here’s the list of reports you should be able to access or ensure you are receiving from your bookkeeper so you can review your numbers and use the insights they provide to take proactive action and make decisions:
Bank Balance (daily) - What is your current cash situation? Where is your cash going? Identify any shortfalls coming up that you need to fill with transfers or external funding.
Accounts Receivable (weekly) - Who owes you money? Your A/R statement should identify when you receive payments and how long it is taking for your customers to pay or for funds to land in your account based on your current payment options. Review to identify what accounts need to be contacted or terms need to be negotiated. Create options for payments to collect your receivables quickly. Follow up is key and increases the likelihood of payment by 80%.
Accounts Payable (weekly) - What do you owe and when are your upcoming payments due? Do you have enough funds to make those payments? Review your Accounts Payable on a quarterly basis to identify opportunities to negotiate recurring payment terms and/or extend payment due dates to work for your cash flow.
Cash Flow Statement (monthly) - Where is your cash coming from and when? Where is it going? Your cash flow report should be up to date so you can review to see what you have coming in and what is going out to plan accordingly.
Profit and Loss or Income Statement (monthly and year-to-date). Do you understand your income statement? How do you use it? This report shows you how much money your business has earned and lost within a period of time. It should clarify how your business is performing month to month, enabling you to compare results over time or during specific ‘seasons’ so you can see trends and opportunities.
Balance Sheet (semi-annual or annual) - Do you understand your balance sheet? How often do you review it and how do you use the information you have. This report shows your current financial position and should inform your plan for the next year while identifying investment or funding options you need to pursue based on your position and obligations.
Beyond consistent reporting, it’s a great idea to identify your business KPIs (Key Performance Indicator). KPIs are quantifiable ways you can evaluate specific areas of your business such as the accuracy of your estimating process by measuring actual results or profit per sale. These are examples of quantifiable measurements used to evaluate particular areas of your business and they vary by industry and sector.
How we do it…
The very best bookkeepers and accounting service professionals seek to understand what is happening in your business and listen to clarify how you want to grow your business. We listen to clarify what you need to know and tailor your reports to deliver the information that is essential to run your business in a clear and concise way. We offer bookkeeping packages to become an extension of your team that includes monthly reporting which can be customized to include weekly or specific reporting for your unique business needs.
We offer you the option to add on additional management reports that enable you to dig deeper into your numbers and better understand your business in more detail.