Financial Reports You Should Run Every Month for Your Business

If you’re a business owner, you’re probably busy with growing, operating, and owning your business. Doing all of these can be a lot. But, running a business effectively won’t be possible without financial reports. These reports are an unnegotiable part when it comes to handling a successful company.  

To help you save most of your precious time, this article will discuss the financial monthly reporting for business that you need to assess. Regardless if you have a small or big business, whether you have a whole accounting team or you go have your bookkeeping software, you must be aware of the following reports and familiarize them well. These are the reports you need to take action, review, and create every month to direct your business on the right path.  

Cash Flow Statement 

Cash Flow Statement records all of your cash-ins and cash outs over some time. When you could just look at a single report each month, this is the one you would want to keep with you all the time. This financial report will help you identify whether more cash is coming in instead of going out. If that’s the case, then it indicates that your business is healthy. Moreover, predicting future cash flow is among the best ways to utilize your cash flow statement. Plus, estimates that are supported by data will help you make important financial decisions and budget well.  

Balance Sheet 

This report is your business’s overall financial picture at the particular date. Balance sheets display your company’s equity, liabilities, and assets—mainly what your firm owes, owns, and how you are financing such resources. Hence, you should know how to balance sheets and build your financial statements.  

Moreover, you can come up with more informed financial decisions and identify trends by comparing your balance sheets from year to year and month-to-month. With this, you can also monitor the main financial ratios that your lenders utilize to identify the health of your company: leverage and liquidity.  

Profit and Loss Statement (P&L) 

This financial report can also be referred to as the income statement. Profit and Loss Statement shows expenses incurred, revenue generated, and the resulting loss of profit for a specific period. Usually, businesses make such reports quarterly. However, you need to issue a P&L statement every month and make it a habit to make sure you won’t miss it.  

Generally, the objective is to make sure that your revenue exceeds your profit or expenses. Though that’s not always the case, you cannot determine whether you are having losses if you fail to check and generate this financial report frequently. When you are profitable every month, then you’re doing a good job. Now, try to opt for approaches on how you can grow and optimize your business. If you are generating losses every month, perhaps you need to step back and start searching for aspects to make changes. If you do so, you’ll eventually find areas for upgrading in your cash flow statement.