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The 5 Essential Financial Reports You Should Be Asking For in Your Business

A question I often get asked from my business owner clients is “what reports should I request so that I can keep my finger on the pulse of my business”.

Now, this differs slightly from company to company. For example, if you are a retail store, you will automatically have daily figures as part of your normal process. However, most companies should request weekly, monthly and quarterly reports.

WHY I NEED TO READ REPORTS!

Before I go through the reports in detail, I know a lot of people don’t like looking at their company’s numbers. And usually it’s because they don’t know what they’re looking for. So usually their accountant or accountant (or receptionist!) gives them a monthly report, which they watch with bated breath, then heave a sigh of relief if there’s a profit, or they wince and swear when there’s a profit. has a loss. But usually, by the time they have that report, it’s already too late. Your business’s financial situation should be at the forefront of your mind every day, not something you look at once or twice a year when you’re short on cash.

REPORTING FREQUENCY

The first thing to decide is how often you should see the reports. I suggest a monthly minimum, if not weekly. This can sometimes depend on whether you have a full-time accountant or they only come once a month.

TOP TIP: MAKE A YEAR-END EVERY MONTH

To help you know what’s going on in your business, one of the first things to implement in your business is a culture of having a year-end every month. By that I mean…you want to make sure that every revenue and every expense is recorded according to the month in which it is incurred. If you insist on this type of culture, you will start to receive precise numbers. So think about the end of the year each month and close all the financial data for each month. This way you know that your reports fully reflect the state of your business and you get accurate profit and loss reports and it can help you identify trends in your cash flow.

As for reports, if you have a full-time person looking after your reports, you should have a weekly meeting with them to review the reports. To make it easier for you, refer to the manual “Essential Models of Financial Management” which you can buy on our website. This manual contains a standard financial meeting agenda that will help guide your meeting so that it is both effective and efficient.

When you meet with your accountant, you want to make sure you have all the reports in advance – before your meeting – so you have time to go through them and highlight any discrepancies that you can then address during the meeting.

YOUR WEEKLY REPORT PACK

So what information do you need to know if your business is doing well or not? Well, your weekly report pack should include the following five reports (by the way, a sample copy of each of these reports is also included in the binder I mentioned earlier):

1) A profit and a loss – this should be provided weekly (if you meet weekly) along with a monthly report and an annual report to date. So there are actually three reports in total!

2) From here you will request a copy of your Aged Accounts Payable. This report shows a list of everyone you owe money to, and when it’s due – or if it’s overdue. If there are amounts that exceed your suppliers’ trade terms, you want to know why. If it’s because of cash flow, you then check your cash flow analysis report to see when it will be paid. To maintain a great relationship with your supplier, you then need to communicate this with them.

3) Another essential report is your aged receivables. This is where you can clearly see who owes you money and if you have any amounts owed. This allows you to track collections long before they are overdue. As part of your financial management systems, you should have a standard tracking system. For example – if a customer is past their 7 day terms of business, what happens – do you follow up with a quick phone call to verify they received the invoice. If its 14 days – what happens – and so on.

If you refer to the “Essential Money Management Models” workbook I mentioned earlier, there’s also a list of demand letters designed to help you when you need to get a little more serious about collection. But again, Aged Receivables is essential because you need to see when your money is coming in – so you can pay your suppliers and employees without having to dip into your own personal cash reserves.

4) This brings me to the next report – a cash flow analysis. This report should be prepared by your accountant and shows when money comes in and when it goes out. You can then see if there are any gaps so you can plan ahead to have that covered. You may need to transfer funds from another account – or are looking for overdue payments. What you don’t want is to know when you are going to transfer the money is that there is nothing in the account!

Believe it or not, it’s often the most underused financial report — and yet it’s the most important. You wouldn’t believe how many bookkeepers or bookkeepers don’t do them either. It’s not so much that it’s difficult to produce, but it’s a working document which means it needs to be updated regularly. But persist with this one, even if your accountants try a mini revolt on it, because it’s a lifeline for your business.

The ‘Essential Financial Management Templates’ workbook I referred to earlier and which can be found on our website has a fantastic cash flow analysis report that will save you and your team a lot of time.

5) The other essential report to have is the bank reconciliation. If your accountant works full time, he can do this weekly using your bank’s online reports. If it’s monthly, they’ll have to wait for the bank statement to come in from the bank before they can finalize. However, keep them posted for this – this report shows that the necessary process has been completed to ensure that the end of the month has been closed and that the money in the bank and any other payments or receipts are accounted for. Basically, a bank reconciliation is performed to ensure that your amounts going in and out of your bank account are correctly reflected in your accounting software.

WORKING WITH YOUR ACCOUNTANT

I would also recommend asking your financial controller to automatically send a copy of your monthly reports to your accountant. This way your accountant can see where you are headed from month to month. Depending on the size of your business, you might then set up regular meetings with your accountant – either monthly or quarterly – to discuss these reports and your financial plans for the coming month.

Once you receive these reports regularly, you will find that you become much more empowered in your business and your finger is never far from the pulse!

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