5 Accounting Reports Vital to Your Business Operations
In any business, financial reports are a regular part of an accountant’s responsibilities. While there are many accounting reports you need to go through regularly, depending on the nature of your business, there are five reports your business just can’t live without. Those five reports are the following:
1. Profit and Loss/Income Statement
Perhaps the most important accounting report for your business is its income statement, also called the profit and loss statement (P&L). This report essentially tells you how much money your business is currently making, along with other pieces of information that are vital to your operations.
A typical profit and loss statement is best utilized when you have multiple sources of income for your business. In this type of reporting, you can almost immediately compare which revenue streams are more profitable than others. A P&L statement is also a great way to identify trends, pain points, and opportunities to capitalize on more profitable areas of business.
2. Balance Sheet
A company’s balance sheet is another essential reporting aspect that provides a snapshot of what your business owns at a single point in time. If you’re managing a small business, this is especially important since you get a glimpse of your accounts receivable, bank accounts, property, inventory, and equipment. These are examples of assets under your business that you currently own. On the other hand, your balance sheet also shows your liabilities in the form of business loans, credit lines, and anything else that you owe.
The purpose of your balance sheet is to “balance” your assets and liabilities, leading to how much equity you have. In short, it’s a report of everything you own and what you owe in a single reporting period.
3. Accounts Receivable Aging
Another important aspect of your business is keeping track of your accounts receivables. These are payments that you are yet to collect from your customers. If you want to keep track of your cash flow, your accounts receivable aging will tell you the outstanding accounts and group them based on their due dates. Reviewing your accounts receivable reports allows you to see running balances and help you identify those customers who pay on time or are always late with their payments.
4. Accounts Payable Aging
On the other side of the coin is your accounts payable aging reports. This accounting report will make sure you are paying your own bills on time and creating solid partnerships with other companies. It’s imperative that you pay your bills on time, so you maintain those strong relationships with your suppliers, utility providers, and insurance carriers. By keeping track of this report, you’re less likely to become delinquent with your payments.
5. Revenue by Client or Customer
Finally, the fifth report your company should prioritize is the revenue by client report. This will help you identify your top customer over a particular period of time. Just as important as who owes you money is who is paying you the most cash for your products and services. You must then use the information on these reports to make sure your clients are satisfied with your service and what you can do to retain their loyalty.
Conclusion
Keeping your monthly books and tax records updated all the time is vital to your business, but keeping a close eye on these five reports is almost as important. These financial reports give you different perspectives of your business that will help you make better-informed decisions.
Totally Booked is here to help you streamline all financial aspects of your business and help you make better sense of them. From bookkeeping services to sales tax, custom reporting, and QuickBooks setup and training, our services are designed to make everything easy for you when it comes to finances. Partner with us today, and let’s get started!