The Importance of Reporting
As a business owner it is important to review financial reports. Financial reports are a way to share the financial story of the business. Whether you are a one man show or you have a full team, reviewing financial reports always help in decision making. Profit and loss is not the only report to be looked at.
Here are the 4 reports every business owner should review regularly along with the business specific reports.
- Profit and Loss – The profit and loss statement will summarize the revenues, costs and expenses for a specific period. To put it simply, a profit and loss report shows you the true profitably of your business and will enable you to plan your budget more accurately. This statement will break down specific components of your businesses and tell you where your biggest costs are coming from.
- Balance Sheet – A balance sheet provides a snapshot of your financial position by summarising the assets and liabilities in your business. Alone, this may not seem as important as say a profit and loss statement but together they create powerful reporting which enables you or your board members to make informed business decisions.
- Cash flow Statement – A cash flow statement will tell you the entire story of your business from a cash flow point of view. This statement shows you the available cash you have in your business. By reviewing your cash flow statement you can plan ahead in case you need to borrow or plan your payables.
- Ratio Analysis – A ratio analysis can show you how your business is performing over time. You can set this report to show which client spends more with you or compare your gross profit percentage with the past 6 months. This report will help you analyze trends in your business and discover why something might work for you now but not a year ago.
It’s important to know that with the right systems these reports can all be completely customised so they’re relevant to your business and easy to understand. Here at Sum and Substance we help clients build these reports in the most understandable way. We create these reports along with the analysis so they can help you head in the right direction for your business. We recommend every business look at these reports on a monthly basis with the Board of directors and/or Management team. Please contact us if you would like any assistance in setting up your financial reports. We can be reached at (03) 9424 9447 or firstname.lastname@example.org. You can directly book in a time to chat by clicking here.