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Do Bookkeeping Right! The 5 Accounting Reports Every Small Business Needs

May 14, 2019

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Managing a business isn't easy. There are a million balls to keep in the air all the time and never enough hours in the day to get everything done.

And when it comes to crunching the numbers, you simply can't afford to make a mistake or leave anything out. That's why having access to all the right accounting reports is so important.

In this article we take a look at the top 5 business financial statements that you need to have on your desk. Keeping reading to learn how to make the most of your small business report accounting.

1. Budget vs Actual

The budget vs actual report is a comparison of actual results from your company's income statement compared against your projections at the beginning of the current accounting period.

This report should be prepared on a monthly basis, then reviewed alongside your financial statements to determine whether or not the business is currently meeting expectations.

2. Balance Sheet

This is the financial statement that summarizes your business's total assets and shareholders' equity at a specific point in time. It's a snapshot of the company's financial well-being

The balance sheet is vital to the leadership of a company for making decisions. You can study it to spot trends, look for weaknesses, as well as areas of the business that need improvement. This report can also be used by financial institutions to determine your business's creditworthiness.

3. Income Statement

Often referred to as the P&L, the income statement summaries the company's total revenues and expenses, typically month by month, or by fiscal quarter.

It's also used by internal stakeholders to evaluate the company's profitability and to asses the current level of risk for investors.

If you're wanting to learn everything you need to know about statutory accounts, you can find out more here.

4. Accounts Receivable 

The A/R (Accounts Receivable Aging Report) is used to categorize outstanding accounts into groups based on a variety of criteria. 

When accounts receivable is poorly managed, this can result in cash flow problems. This typically occurs when you have delinquent accounts on your books due to slow paying customers.

The A/R report can help you to accurately track the collections process and manage invoices more effectively, thus resulting in healthier cash flow for the business.

5. Cash Flow Statement

This is the summary of all cash flowing in and out of your business over a specific period of time. The cash flow statement differs from the balance sheet and income statement due to the fact that it only takes into account cash money activity.

The cash flow statement is crucial for the process of budgeting and decision making within a company.

Accounting Reports Every Business Owner Needs

Running a business is all about the numbers. You must be able to track cash, credit, expenses, and be able to project profits in order to stay in the black. That's why each of the accounting reports discussed in this article is so important.

Click here to learn what the Holy Bible has to say about finances.