Why Accurate Financial Reports Help Businesses Thrive
In today’s world, every business runs on data. The more information a company has, the better its ability to make smart, strategic decisions. Detailed, up-to-the-minute financial reports contain some of the most essential data a business can gather. As an accounting professional, one of the greatest assets you can provide a client is accuracy in these financial reports and ready access to them. It will save them money, help them develop better practices, and set them up for future success.
How financial reports provide insight
The fact of the matter is that many business owners make decisions based largely on feel. They may think a certain product is a hot seller or that a certain marketing strategy is working, but they’ll rarely have the numbers to back up their beliefs. Why don’t business owners take the time to use detailed data rather than intuition to make decisions? Well, because amassing those numbers and presenting them in an actionable context takes some work.
Take retail, for example. A business can probably tell you how many of a certain item they’ve sold in a certain time period. But can they tell you the total landed cost (TLC) of those products and the net profit generated by their sales? Do they know how much they’ve spent on advertising that product and the costs associated with it? Odds are that they can provide little more than a ballpark figure for these vital pieces of information. It doesn’t have to be that way.
The reports that matter
At the bare minimum, every business owner should be able to refer to three essential financial reports anytime they’d like.
The most basic of these is the income statement, which shows total revenue, total expenses, and net income. An income statement provides a 30,000-foot view of a company’s health. If a company wants to gauge its success over a given period, their income sheet is the best place to start.
A balance sheet is similar to an income statement, except that is compiles the value of assets and liabilities on hand. Where the former provides a snapshot of what has happened, the second shows insight into what’s gained and what’s owed.
Finally, you have the cash flow statement. When you consider that more than 80 percent of businesses fail due to cash flow problems, this data is particularly important. It’s comprised of these three sections: cash flowing into the business from operations (credit doesn’t count!), cash flowing out in the form of investments in the business (marketing, office space, perks, etc.), and money received in loans and paid out in dividends. In essence, cash flow is the picture of the liquidity of a company.
And that’s just the beginning
AccountingSuite™ offers all three of these financial reports to business owners no matter where they are or which device they’re using. It also provides access to even more detailed, itemized reports with graphs and charts for easier viewing. If you’re not providing your clients with relevant, time-sensitive data that will save time and cut costs, you’re missing a huge opportunity. For more information on the best financial reports available click here.