The Top 6 Essential Financial Reports for Your Small Business

November 11, 2021

As a financial services provider, we at KGC often get asked the question: what sort of financial reporting should I use for my small business? Hopefully, if you are asking this question, you are already at a stage where you are keeping great records of your transactions and business records- and already have some financial data to work with. That is a great place to be as numbers don’t lie, and can reveal a lot about the health and flow of cash in your small business. Here’s the rundown of the 6 most important financial reports to periodically run and review to keep your small business’s finances in tip top shape.

1. Balance Sheet

A balance sheet is the perfect snapshot of your company’s financial health. It shows your company’s assets, liabilities, and equity. The data found in this report is a great indicator of how strong your business is as a whole, as it typically shows outstanding debts and net profits. A balance sheet is one of the most important things to review when you are looking to expand your business, buy equipment, or figure out where to spend excess earnings. Most digital accounting softwares will run these reports automatically, but if you prefer a more analog style, you can also find free templates online for balance sheets.

2. Time Tracking Report

Time tracking may not be the first thing that comes to mind as a financial report, but it is a critical component in figuring out where your precious energy and resources are going. Time is money, after all. If you have employees then you need to know what their time is being spent on- but you also need to know what YOU are spending your own time on, so you can figure out how to prioritize your time and which tasks to delegate.

3. Profit and Loss or Income Statement

Financial Reports

This type of financial report is all about sales, expenses, and profit. It’s a breakdown of how much money you brought in in sales, how much you are paying towards operating expenses and taxes, and what is left over in the end. P & L statements are used to track revenue generating activities and find opportunities to maximize profits and reduce business expenses. 

4. Cash Flow Statement

Cash Flow statements rely on the information from your business’s balance sheet and income statement to demonstrate how money is flowing in and out of your small business. With this information, investors and lenders can get a good idea of how quickly your assets (including inventory, equipment, and other investments) can be turned into cold hard cash. It is also used to gauge company performance and quality of earnings- something that is important if you are seeking out loans or investments to expand. 

5. Accounts Receivable Aging Report

The AR aging report shows you which of your customers still owe you money and how much time has passed since you sent an invoice. This will allow you or your accountant to prioritize which accounts to pursue when it comes time to collect on outstanding balances. The effort is well worth it when you get that cold hard cash in hand, so this report will be your best friend in no short time. 

6. Budget Vs Actual Report

Daily Journal

In previous articles we have emphasized the importance of setting a budget and sticking to financial goals for yourself and your small business. Well- the budget vs actual report will show you a side by side comparison of how well you are sticking to your budget goals. This will keep you on tra ck and make you aware of any areas you may need to be more mindful of in order to achieve your business goals.

Does the thought of running reports bore you to tears? Try to get past any fears or intimidation and make reviewing financial reports part of your regular business practice. An experienced bookkeeper like the finance specialists at KGC consulting will help you prepare these essential reports as well as keep track of your day to day business transactions. To learn more about using financial reporting to optimize your business, or to get help with your small business’s day to day finances, reach out to one of our wonderful bookkeeping professionals today!

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