5 Most Essential Financial Reports For Your Business

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Business reports can help you analyze the past, present, and future of your business. Having expense report software by your side will help you run better analyze operations and make better business decisions. This post will discuss the essential financial reports for your business. When you review the reports, you will get a solid understanding of your finances, minimize errors and stay miles ahead of competitors.

1. Balance Sheet

The balance sheet is a business expense report that summarizes the company’s total assets at a given point in time. It is normally made at the end of the accounting period. These also include resources the company owns and their sources of financing.

  • Current
  • Non-current and intangible asset
  • Shareholders’ equity
  • Liabilities

 

You can even use it to identify trends and make informed financial accounting decisions. Besides, it comes in handy with lenders as it can determine a company’s creditworthiness.

2. Income Statement

Popularly known as Profit and Loss Statement (P&L), Statement of Income, and Statement of Operations, these business reports let you have a look at the total expenditure and expenses incurred by a business. This comes in handy when calculating the profits made over a month, quarter, or year.

It is managed by internal and external stakeholders alike. This is done to evaluate profitability and assess risk levels for an investor or creditor. In order to have viable revenues, revenues must be more than expenses.

3. Cash Flow Statement

You can easily create a cash flow statement using expense report software. It lets you analyze the cash in/out of business over a period of time. This statement is somewhat different from the balance sheet and income statement, considering only cash money activity. No sales or purchases done with bank-to-bank transactions and other methods are taken into account.

The Cash Flow Statement has three sections:

  • Operating
  • Financing
  • Investing activities

It lets you know which areas are generating and using the most cash. Besides, it will also help you estimate future cash flow and aid budgeting and decision-making.

All these statements are prepared by your accounting team every month after all transactions have been completed. Once these reports have been generated, they can be used to monitor key performance indicators and forecast trends.

4. Accounts Receivable Aging Report

The Accounts Receivable (A/R) Aging Report is responsible for categorizing outstanding dues and receivables based on the invoice’s due date. This is done for invoices in the time range of 1-30, 31-60, 61-90, and >90 days overdue.

A common source of insufficient cash flow, especially for small and mid-size businesses, is poor accounts receivable management. Lucky expense report software can help you manage this and business reports with ease. The more cash you have in receivables due to customers who avoid paying you or make late payments, the less cash you will have for running your operations.

Reviewing the A/R Aging report will let you manage the collections process immediately and even streamline the invoicing process. Besides, when you have all the processes in place, you will be able to create more accountability for the person responsible for collections.

The A/R Aging Report can easily be generated with most expense report software and can be analyzed at any time. However, if cashing on accounts receivable is becoming difficult for your business, a weekly review of the report may be required to assist in rectifying past due accounts. Once these are identified, collection procedures can be initiated to significantly improve business cash flows.

5. Budget vs. Actual

This report compares actual results stemming out from income statements vs. the budgeted amounts that were estimated at the beginning of the period.

This report will let you assess how closely your company’s spending and revenue generation is in sync with your financial forecasting projections. Besides, it can also help identify areas that were over/ under budget. This will further indicate your ability to hire employees and bring in the required attention to the gross profit margin that is not in line with financial reporting expectations.

The Budget vs. Actual Report should ideally be prepared every month and reviewed with financial statements to determine further investigation of areas.

Wrapping Up

This was all about how accurate financial reports for business can help you better understand finances and adequate cash flow at all times.

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