FINANCIAL REPORTING

When you own your own business and you are responsible for the day to day running your instincts can tell you what is working and what isn’t. If your business started to grow or change how would you measure this? If you were asked to quantify the business successes or failures where would you start?

The most effective way to keep track of your business’s performance is through financial reporting. This provides a crystal clear view of the business’ health and success.

There are two areas within your business that can benefit by good financial reporting:

• investment decision making

• judging your managements effectiveness

These reports are most commonly used:

Balance sheets - this gives a quick overview of your financial status on a specific date. It shows what the business owns against what it owes.

Cash flow statement - this shows a company’s short term viability. It is useful for calculating your ability to cover your expenses like bills and payroll.

Profit & loss account - this report shows whether your business has made a profit or a loss over a given period of time. It shows your total income and your total expenses, if your income is more than your expenses this would show as a profit; if your income was less than your expenses this would show a loss.