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The three vital accounting reports for your small business

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Last editedJun 20212 min read

Accounting reports are a natural way of providing regular insight into the business. They have been used for generations as the measuring sticks against which the health and wealth of a company are judged.

What are accounting reports?

More than just a company financial report, accounting reports exist to present a snapshot of where a business is at any one time and where it could potentially go in the future.

Not only is some form of accountancy the best way to trace your company’s financial evolution – it’s also mandatory for legal purposes. Best of all, it will help you make better business decisions. 

But what kind of accounting reports should your business be reviewing regularly? And how often should you be reviewing them?

The 3 different types of accounting report

For most businesses, smaller ones particularly, a balance sheet, income statement and cash flow statement will generally be compiled at the end of every calendar month. This is then used to calculate key performance indicators (KPIs) and monitor them over time.

The balance sheet

Think of the balance sheet as the jack-of-all trades. This is the sheet that summarises your assets, liabilities and equity over a snapshot of time in the trading life of your company. This is the sheet you’ll be using to identify trends and make decisions about your immediate financial future.

Income statement

Also known as a profit and loss report, this statement focuses specifically on the revenue earned over a set period. This is the report that will be used by investors to evaluate your business as an investment opportunity. Generally speaking, if revenues are overtaking expenses then you’re doing ok.

Cash flow statement 

Whereas the previous reports took into account all forms of financial activity, a cash flow statement focuses specifically on incoming and outgoing cash. This is an invaluable tool when estimating future cash flow and budgeting as it can help to pinpoint which areas of the business are generating the most cash and which areas are losing the most.

Yearly, monthly, weekly or daily reports?

While monthly and annual reports are common, some businesses swear by even more regular accounting reports. For larger businesses, for example, daily inventory reports and cash flow reports might be necessary for particularly busy periods.

It might also be the case that conventional annual reports are not giving you the insight you need. Or perhaps you suspect theft or fraud from within the company and require a more immediate answer? 

Weekly reports and daily reports are going to require more work for your accounting department, and there is also a danger of focusing too heavily on stats and not enough on people. But the more often you make these reports, the better your analysis will be.

Visualising your accountancy

Accountancy is not a facet of your business you can afford to shortchange but thankfully, dozens of affordable accountancy software options are available. This software not only keeps your reports in one convenient digital location but can also visualise the data in tables and charts that are much easier to sell to investors than raw data.

You can also put together more specific reports, such as accounts receivable ageing reports, which can prove vital in situations where you have slow-paying or delinquent accounts. You can also compare forecasted and budgeted reports with actual reports to gain deeper insight into how smart you’re being with your budgets.

We can help

If you’re interested in learning more about accounting reports then get in touch with our financial experts at GOCardless today. Find out how GOCardless can help you with ad hoc payments or recurring payments.

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