Key Business Reports to Manage Your Finance Better

It’s a known fact that reports are one of your most vital assets to manage finance efficiently. The more you use the business report, you will be in a better position to analyze the key trends, know what is working, not working, strengths and weakness etc. of the business. The Insights from the business reports allow you to make smart and timely decisions which help in managing finance better and aid in business growth.

Among all the financial reports, below are the five most important reports that every business owner should be reviewing regularly and be on top of it to understand the company’s financial performance.

Balance Sheet

A balance sheet, also known as a "statement of financial position," reveals the details of the company's assets, liabilities and the amount owned by shareholders. A balance sheet helps you to measure the exact financial position of a business on a given date including the economic resources the business owns, owes, and the sources of financing for those resources.

The higher the part of owners’ equity in comparison with debts, the more the company is financially autonomous, therefore solvent. On the other side, if debts are high and the company depends on them to finance the operational activities, a business can be said to be ‘doing good’ only if suppliers and banks credit lines are maintained well and are raised proportionately with company growth.

It is critical for business owners to periodical review the balance sheet, determine the trend by comparing across periods and accordingly make suitable decisions.

Profit & Loss Account

Profit & Loss Account, also known as Income Statement, tells you about the money spent or cost incurred in an organization’s effort to generate revenue, representing the cost of doing business. For a given period, you can get to know the net profit after considering all the expenses incurred and income earned. This statement helps you to evaluate the profitability of the business and regular review will help you assess the risk to the business considering the actual profitability Vs the expected return.

The company can be viable and valuable only if the revenue exceeds the expenses and meets the expected return. Being on top of your profit & loss account helps you determine the early risks and accordingly take suitable actions.

Bills Receivables Report

Bills receivables are one of the key sources of cash inflow, any inefficiency in managing accounts receivables will impact your business in several ways and potentially hamper the growth of the business. The longer an invoice sits as bills receivable, will lead to cash flow issues and at some point, it may turn into bad debt. Therefore, it critical for you to manage the bills receivables efficiently and regularly review it. A regular check of bills ageing report will help you to identify the bills which are pending from long-time and one which requires immediate action. This along with payment performance analysis of customers and internal credit control techniques will help you to manage bills receivables better and subsequently lead to an increase in the financial health of the business.

Cash Flow and Projection

It is extremely important for businesses to monitor the cash flow since it is the lifeblood of the business and if not managed efficiently, it will be the major reason for the failure of business due to insufficient funds.

Analyzing the historical pattern of cash inflow and outflow gives some insights about the changes in cash position between the two periods and cash flow projection statement enables a business to make better financial decisions.

Budget and Actual report

Every business, at a given point in time, will have a short term and long-term business expenses. It is critical for a business to plan the budget and track the actual spending for a given period. Budget and Actual report help you to identify the spending and revenue generation against financial forecasting projections included in the budget. A regular check will help you recognize the areas where the spendings are over or under the budget and accordingly apply the necessary corrections.

Conclusion

Of all the financial reports, the above reports should be reviewed regularly to manage your finance better. For you to be on top of these reports, on-time availability of reports is very critical. Only when the reports are available on-time, it allows you to evaluate the performance and take on-time decisions. Automating your books of accounts using an accounting software will ease the bookkeeping right from recording to reporting and more importantly, all the reports will available instantly so that the smart decisions can be made on-time.