Business success requires a lot of things including a mission/purpose, excellent products or services, good people, and good operations. But it also requires profits. The old saying “No margin, no mission,” means that every successful company must have good financial and accounting practices that help it to achieve sustained profitability. As financial and investment expert Warren Buffett said, “Accounting is the language of business.” That “language” requires monthly reporting, quarterly, and annual reports. Good information is both accurate and timely, so yes, it seems it is always “that time again.”
What Are Financial Reports
Financial reports, also called financial statements, are statements that disclose a company’s financial status. The four essential reports are the balance sheet, income statement (or profit and loss statement,) cash flow statement, and statement of owners’ equity.) These reports are used by banks, investors, stakeholders, and regulators to approve loans, lines of credit, provide essential insights on the health and viability of a company, and to ensure the organization is following Generally Accepted Accounted Principles (GAAP.) Monthly reporting requires data that is current and actionable for management, and quarterly and annual reports are required by government authorities and others.
Why are Financial Reports Important?
Financial reports, and specifically monthly reporting, help a business:
- Know if they can generate cash flow and determine where that cash can be used.
- Identify details of business transactions.
- Evaluate if it can pay its debts.
- Identify potential issues impacting their profitability.
- Make financial and operating predictions based on accurate data.
- Track revenue and expenses. Effectively plan and execute budgets.
- Facilitate ways to improve its processes.
- Determine its business value.
When are Financial Reports Due?
Accounting is a function that must be done continually and consistently to achieve accuracy and deliver value. Typically, monthly reporting delivers reports to management by 20 days after the end of the reporting month. Monthly reports are used for internal audiences including the CEO, owners, and management to provide a clear view of performance and to provide information leading to make smart decisions to move the business forward.
A quarterly report is a collection of financial statements issued by a company every three months, based on their financial calendar. Publicly traded companies are required to file their reports with the Securities Exchange Committee (SEC.) Most companies have accounting periods that end at the end of the calendar year and each calendar quarter, although some have different reporting periods.
How to Make Financial Reports
Financial reports provide a full picture of a company’s financial activities over a monthly, quarterly, or annual basis which can lead to developing sustainable strategies and actions fostering profitability and leading to sustained growth. To develop monthly reporting, quarterly and annual reports that accomplish their purposes consider these aspects:
- Define the audiences who will receive the reports and prepare the required information for a good understanding.
- Identify the metrics of performance that will be used in each of the statements: balance sheet, income statement, cash flow statement, and statement of owners’ equity.
- Assemble each of the appropriate documents. Using modern software and tools, along with professional assistance will make this less challenging than it may appear at first.
- Choose the right visualization to make key points.
Get Expert Financial Assistance That You Can Rely On
Contact Doerhoff & Associates, CPA, based in Jefferson City, MO for professional accounting and financial assistance that you can count on. Doerhoff & Associates has one goal in mind, to provide comprehensive business accounting services designed specifically for your success.