The four reports that can help you take charge of your company’s finances

To understand the state of your business' finances, you need good reporting. Reports can give you a snapshot of your business’ financial health, as long as they are based on up-to-date figures. But they may not tell the whole picture.

Without sound management of your business' finances, you could end up going the way of too many businesses that may make poor choices that can endanger the future of the company. You should have appropriate and accurate reporting on financial trends to enable you to make sound financial decisions.

Here are tips on how to leverage your accounting reports to keep the firm financially healthy.

The value of relevant financial reporting

When you’re planning for the future and evaluating the present state of your company’s finances, the right reports can give your management team the data it needs to invest resources in growth areas and help prevent financial losses. And timing is everything.

For many companies reporting on finances can be onerous and time-consuming. It might be done on a quarterly or annual basis, if at all. But without solid and regular reporting, it may be almost impossible to accurately assess risks to the business.

Are your reports enabling important decisions

• Do you review AR aging on a regular basis, to understand trends and spot patterns?

• Can you reliably access up-to-date basic reports like profit and loss statements, balance sheets, and accounts receivable?

• Does your reporting go beyond the basics to give you actionable insights that help your management team make smart decisions about the company’s future?

Time is always in short supply. But pertinent reporting can sway minds and help the management team make decisions founded on solid information. And it doesn’t have to be time-consuming.

The four reports to help take control of your finances

Core bookkeeping provides income statements, balance sheets, cash flow, receivables aging, etc. But, to make informed decisions, you should have advanced reporting to evaluate whether your finances are on the right track or not.

EBITDA

EBITDA (earnings before interest, taxes, depreciation, and amortization) is widely used by corporations as a metric of the company’s financial health. By deducting interest expenses and taxes, as well as depreciation and amortization, from net income, you get a clearer picture of profitability. This report takes into account the ongoing real economic costs of assets that we account for via amortization and depreciation. So, it’s a better proxy for profit than just net income.

Revenue trends

Monthly receivables and revenue reports provide a spot check to help confirm that your company is meeting billing targets. However, to truly understand performance, you need to see the trend lines. Revenue trends reports can help you spot negative and positive patterns and plan for seasonal fluctuations.

Cost trends

A rising revenue trend line alone isn’t necessarily a sign of healthy finances. If your cost trend line rises faster, what looks like positive growth might be an illusion. Managing and controlling costs is crucial to your business' profitability. Reporting that shows you the costs of personnel, marketing, office maintenance, and rents is an essential element of your big picture review of your financial health.

Income trends

Income trend reports show you the bottom line over time. Is income static, rising, or falling? Is there a seasonality to either revenue or costs that may affect your bottom line or inform the timing of a capital expenditure? These data are relevant to almost every decision involving your company’s finances, from short-term spending decisions to long-term planning and hiring.

Visuals are key to understanding your finances

Having the relevant data at your disposal when you need it is the first step to taking control of your finances. To use this information for the benefit of the business, you should be able to communicate it easily to people with varying degrees of financial knowledge.

Reports on your company’s finances can take the form of spreadsheets, but charts and graphs are a better option for concise and quick communication of trends and bottom lines. When you put trends in a line or bar graph, stakeholders can see the direction of the company’s finances over time.

A busy business owner might not have time to delve into a spreadsheet, but a chart tells the story of the numbers at a glance.

With automated reports and visuals, you can save time manually creating and formatting presentations—and avoid translation errors. Integrating a reporting tool into your accounting platform can provide seamless, accurate, and relevant reports.

Navigate financial reporting with ease

Perhaps the most important aspect of reporting on your company’s financial health is ease. If relevant data isn’t easy to access or if reports are difficult to create, essential analysis may not happen.

Bookkeeping Connect, a PwC product, is an automated accounting and bookkeeping solution, to take the hassle and stress of your company’s finances off of your plate. Bookkeeping Connect’s easy-to-use dashboard shows you relevant data with clear visuals that allow you to respond quickly to information requests. You have EBITDA, revenue trends, cost trends, and income trends reports at your fingertips. Migrating to the platform is simple and supported by our dedicated customer service team.

The world moves fast. Your accounting should move faster. Find out how Bookkeeping Connect can provide you with the relevant reporting you can use to accurately and easily analyze your finances.