Is This Your Situation: You Need Accurate Monthly Financials

Monthly financial reporting helps owners, managers, and potential lenders get a better understanding of a company’s current financial status and anticipate future performance. You can see financial trends when you examine daily, weekly, and monthly financial reports. You’ll be able to manage long-term profitability by improving internal business performance while staying updated on significant progress or changes in your financial status and cash flow.

These reports help you evaluate:

  • Whether you can effectively generate cash flow and where that cash can be used
  • Specific details of a business transaction
  • Potential issues that may be hurting or helping your profitability
  • Whether you can pay off debts
  • Financial ratios that show your financial position

Many business owners want to be updated not monthly, but weekly or even daily, to ensure an accurate representation of the business’s finances. Accounting software can help you create dynamic reports to assist you in updating cash flow statements. Financial reports are easier to make sense of when you get them in a visual way that is more digestible. Interactive dashboards help you:

  • Make predictions based on accurate data
  • Effectively plan your budget
  • Track your revenue, expenses, and profitability
  • Improve the performance of your processes
  • Create clear, accurate reports

What other financial documents should you be checking?

  • The sales forecast. Create a spreadsheet projecting sales over the course of three years. Put in sections for different types of sales and create an estimation of what you believe your firm will sell, including pricing and cost of sales. A sales forecast will help you determine whether you’re on track to meet your company goals.
  • The financial budget. How much will it cost to make sales? Consider everything from payroll, rent, advertising and promotional expenses, to your interest and taxes. Even though these numbers will be estimates, you’ll be able to make your financial budget more accurate over time.

The creation and examination of financial statements help you get a snapshot of your firm’s financial health. Immersing yourself in financial statements will probably seem daunting, but it’s the best way for you to understand how money flows in and out of your business so you can gain the context you need to ask the right questions and make the best decisions. You also want to provide correct answers to possible investors and other stakeholders.

If you need help with understanding how to create these financial statements or to establish a protocol for accurate documents to become the foundation for making future business decisions, give R&A a call. We also can assist you in interpreting your important financial statements.

About this Author

Allison and her team provide a comprehensive suite of outsourced accounting and financial services to clients. Prior to joining R&A in June 2018, Allison worked in the nonprofit sector for thirteen years. Her experience also includes more than ten years of teaching at the university level. Allison holds a bachelor’s degree from the University of Chicago and master’s degrees in social work from Eastern Washington University, business administration from Gonzaga University, and professional accounting from Colorado State University. Allison is an avid basketball and baseball fan who also enjoys travel, home improvement, and spending time with her family.