What Can I Do with Monthly Financial Statements?Posted on December 16th, 2017
As a business owner, you understand that financial transactions have to be recorded. Every time you pay a supplier, purchase equipment, or make a sale, that is marked in your general ledger. But this data isn’t just a collection of numbers – it can provide real insight into your business’ financial health when utilized in routine reporting.
When monthly financial statements are generated, business owners are better able to do all of the following:
Obtain a Clear Picture of Assets – If you’re looking to secure a loan for your small business, or present financial data to potential investors, it’s vital to have a clear understanding of your company’s value and assets. With a balance sheet prepared by a CPA, business owners have a detailed record of property owned, equipment, and even any liabilities that can affect the value of these assets. With this report, you can provide third parties with the reassurance that your business is stable and financial data is well organized.
Determine Profitability – Which products or services provide the most profit for your business? If you aren’t sure about key drivers for success, an income statement can provide necessary clarity. As profit is affected by the amount of money expended to provide a service or product, this is taken into account on an income statement as well. Use this report to understand daily operational transactions and how money is made at your business.
Understand Spending Habits – How much money are you paying for routine and necessary expenses, such as any vendors providing supplies to your business? Where does your current inventory stand? The money that moves into and out of your company is displayed on a statement of cash flow on a monthly basis. As a business owner, it’s important to know the cash coming into your business is not outweighed by the money leaving. Positive cash flow is important for continued operational success.
Business Analysis with Routine Financial Statements
If your business is experiencing negative cash flow or if you need help optimizing operations to reduce overhead, routine reporting plays a key role in meeting these goals. To make any successful strides in improving internal controls and promoting business growth, you need to know where you stand financially. This information has to be current and relevant, but there’s no such thing as too much data when it comes to analyzing the ways your business can improve current processes. Without these reports generated on a consistent basis, business owners are in the dark about where they stand and what steps can help them meet their goals of increased profits and reduced liability.
Ask Us about Monthly Business Accounting!
While profits and loss statements, cash flow reports, and income reports are certainly important, many business owners don’t have the time or knowledge to create them. If you need help with financial write-ups for your company, contact The Accounting Office for your consultation.