5 Accounting Reports You Don’t Want to be Without

While we all have to keep our monthly books up to date for tax and other compliance reporting purposes, we should never stop there. Your books hold a wealth of information you can use to run your business better. 

Here are five reports you should never be without:

Budget-to-Actual Profit and Loss Statement

Hopefully you’ve already experienced the power of the profit and loss statement. Let’s go a little deeper and add a budget comparison. With this addition, you can plan your way to the sales and profit figures you want. You’ll know every month whether you’re on track, ahead of the game (give yourself five stars!), or you need to hustle to make it up next month. 

Most accounting systems allow you to enter monthly budget numbers for your sales and expense accounts. You can enter them at the beginning of each year and adjust them throughout the year. It’s like having Google Maps on a cross-country journey. You can see where there’s construction and traffic, so you can take another route. You can also see where there are cool places to stop and take advantage of the fun. 

Your numbers tell a story!

Actual-to-Prior-Year Profit and Loss Statement

This is an easy report to generate assuming you have at least two years of information in your accounting system. It allows you to compare your business’s results from the current and previous year. Are you ahead? Behind? Do you have new products and services? New employees? New expenses?

With this comparison, you can take action based on how you would like your business to perform this year versus last year. While this report is readily available, few businesses study it to glean the insights available. Be sure to spend some time analyzing the data.

Sales by Item, Customer, or Division (or All Three)

Inside every business’s sales information is a treasure trove of possibility. Where are you seeing growth, and how can you capitalize on it? Where do you see a slowdown, and can you run a promotion to juice things up?  

Choose the breakout—customer, item, division, etc.—that is meaningful to your business type. If possible, arrange for a searchable database so you can drill down into the details even more. Are there trends? What opportunities do you see?  

Operations Reports   

To find out more about your profitability and get into the details of how your expenses are matching up with your sales, you need to review your operational accounting reports. The exact report will depend on your business. 

If you provide a service, you’ll need payroll reports and time sheets. If you are in retail, you’ll need inventory reports. If you are in construction, you’ll need job cost reports. And if you are in manufacturing, you’ll need the cost of goods sold and other reports to evaluate assembly and production efficiency.

Cash Reports

The last report that is essential for good business management is all about cash. There is more than one option here, and these reports can include accounts receivable aging, accounts payable aging, cash flow forecasting, and various cash flow reports.  

If you grant customers credit, you’ll want to actively make sure that money is collected on time. If customer balances get too old, action must be taken. Even if you don’t grant credit, transactions such as returns, expired credit cards, and bounced checks need special attention. 

The same is true for amounts you owe to vendors with the accounts payable aging report.

If you run tight with your cash balance, you may want to have a cash flow forecasting report on hand. This report will warn you when your bank balance may dip below your needs. You can then delay vendor payments or find an infusion of cash to cover the shortfall.     

With these five categories of reports, you will have dozens of opportunities to proactively run your business and improve your results. If we can help you find or generate them, please reach out to us any time!  You can learn more about our services at firststepsfinancial.com.