Small Business Bookkeeping Victoria BC
The Power of Monthly Financial Statements
For every small business, financial reporting is key to tracking progress and identifying benchmarks. With accurate reporting, it’s possible to measure the overall health and growth rate of an organization.
Keeping track of finances can be a headache for many small business owners. With monthly financial statements provided by qualified accountants, entrepreneurs can overcome this challenge.
Effective Management with a Monthly Financial Statement
Business owners can run their organizations more effectively when consistent financial reporting is in place.
Financial reports can be used to keep a business plan in perspective. They provide regular snapshots of where the business stands. Better decisions are made thanks to the help of frequent reporting.
Monthly financial statements offer insights surrounding three key financial positions:
- Income statement.
- Balance sheet.
- Statement of cash flow.
An income statement helps business owners discover trends. It becomes apparent where sales growth is strongest, which can inform future promotions, service offerings, and product launches. The income statement shows where the profit is being made, which is a key metric for making long-term business decisions.
The balance sheet is equally important. In this part of a financial report, the company assets, liabilities, and owner’s equity are all outlined in detail. This report shows the financial health of a business. A strong balance sheet with a good ratio of assets and liabilities can indicate how easily a business can respond to financial difficulties.
The statement of cash flow is also a critical aspect of a financial report. As one of the most useful financial analytic tools, a cash flow statement can indicate short-term sustainability. Cash flow also indicates how much risk a business can take on.
It’s All in the Decision Making
Some business owners look at financial reporting as being all about the numbers, but there’s more to it.
Monthly financial statements allow for better decision making. If a company can’t see where its profits are coming from, it won’t know where to focus resources to maintain income, or where to do the same to prop up a failing business segment. Loss-making segments could be entirely removed from the organization. It would be impossible to identify these without monthly reporting.
Strategic decisions need to be based on sound data. This can come from a combination of market research and organizational experience, but the finances will underpin the entire process.
Small businesses focus on growth, and external investment is often needed to support this. Whether the money comes from private investors, bank loans, or even grants and government assistance, the investing parties will want to see accurate and detailed financial reporting before they can commit.
One of the Most Valuable Financial Tools for Growing Businesses
Monthly financial statements aren’t optional. Any business that wants to grow should leverage an experienced accounting team to generate monthly financial reports that guide business strategy and growth pathways.
Schedule your free consultation to determine the correct bookkeeping plan for your business needs