5 Important Financial Reports
Do you regularly check and understand the following reports on your business to see how it has and how it is likely to perform??
Profit and Loss - This is the most likely report that you will have checked as a business owner, as it shows the performance of the business for a set period of time. But there are many options on how to produce this report and the value it will have. Do you use cash or accural, month by month, year to date? Do you also realise that if you are paying off loans or taking drawings, these expenses may not be reflected on this report - you may see a big profit but have no money in the bank!
Balance Sheet - This is important as it shows you the current financial position at any given date of the business. And some of the profit from your profit and loss report may be hiding here in the form of debt repayments or owners drawings.
Cash Flow Forecast - This is essential if you want to plan for the growth of your business. It will allow you to predict the performance of your business in the coming months or years and allow you to determine the answer to questions such as whether you can afford hire more staff, or buy more stock.
Aged Receivables - It is amazing the number of business owners who have old unpaid overdue sales on their books. It is important to keep on top of clients and ensure timely payment. This report can help with this.
Aged Payables - And finally, who do you owe money to? This is important to ensure you keep relations in a good place with your suppliers. If you get a bad reputation you lose your bargaining power and often they will demand cash on delivery. This in turn will negatively affect your cash flow.
If you need assistance with getting your head around these reports or how to produce them from your software, we are here to help!
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