As a business owner, whether that’s an SME, Freelancer or start-up the financial reports of your company play a big part in not only being a legal requirement but give you real-time financial information along with the tools to plan for the future of your business.
So what is financial reporting
As a company we all have different views on how we would like our reports to look but the basic information they contain is the same for every company. Financial reporting should depict an accurate position of a company’s finances, these are sometimes referred to as Management Accounts and will include revenue, cost of sales, expenses, and overheads. This would give you a snap-shot of the business trading position for the current financial year and then the balance sheet would show previous years profits, debtor amounts outstanding along with creditor amounts due, current state of the bank account, any outstanding loans, fixed assets, investments/capital, and then there’s the cash flow, showing what you’ve spent and received.
All of these reports can give an insight into your company’s position and are used to make informed decisions on any future investments you may be seeking to grow your business.
The benefits of financial reporting
Without financial reporting you have no idea how your business is performing so it’s critical that these are not only maintained but studied and acted on. Don’t get caught out and act before things start to slide.
- Managing your liquidity – Debts can spiral and giving your customers more time to pay can seriously damage your business. A tight rein needs to be applied to debtors making sure you have uptodate reports on outstanding invoices is crucial, having good systems in place for reminders that can be emailed out when and if necessary. Also, the same applies to your liabilities, before considering or taking out a business loan you need to make sure the future of your company is stable.
- Sales trends – Knowing what has been sold in the past and what has been profitable, whether you have a seasonable business or not sales product reports will help you identify any trends as they appear which you can use and build on.
- Access real-time – It’s paramount that the information you have is real-time only then can you make informed and accurate decisions, this can be achieved with a cloud solution platform. A system that gives you access online 24/7 to your accounts is now seen as a must have for any business along with phone apps giving you the ability to upload receipts, create invoices and view reports.
- Government compliance – With the introduction of Making Tax Digital and online reporting the need for a cloud system has become a prerequisite when looking for accounting software. Most companies now have to file their VAT Return online through their accounting software and it can be a deal breaker if the one you’re using doesn’t have this.
- Creating your own reports – Every company has different reporting formats, same information just shown a different way so when it comes to reporting having the ability to create your own reports from within the application or exporting the information out and then build has become an essential part of any online accounting system on the market. Whether that’s by tailoring the internal reports with account categories or importing your own chart of accounts all this can be achieved with the right online accounting software.