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Show of hands: Who has opened a financial software application and stepped away a bit overwhelmed with the amount of data available?

We’ll lead the charge and raise all our hands. Data is decidedly awesome – but it can prove daunting to know what, exactly, to do with it all.

The wealth of knowledge is certainly there, but even if a business owner knew what reports to run, would they know why they needed them?

So we asked our very own finance department here at BELAY to shed some light on what reports they run for our C-level executives and what they’re analyzing for our company’s financial health and growth goals. 

1. Statement of Profit & Loss (also known as an Income Statement)

The What: Also known as an Income Statement or P&L for short, this report shows a company’s income and expenses for a particular time period, though monthly and annually are the most common times reviewed.

The Why: The P&L shows the performance of the company, summarizing the total revenues and expenses incurred by the business, showing the profitability, such as net income or net loss, over a specified period of time, usually a month, quarter or year.

The Income Statement is used internally and externally to evaluate profitability and help assess the level of risk for an investor or creditor. In order to have a viable and valuable company, revenues must exceed expenses.

2. Balance Sheet

The What: This report shows a company’s assets, liabilities, and owner equity or capital on a particular date. This is a snapshot in time not a report that shows over a period of time.

The Why: Just because the P&L shows the company is ‘profitable’ doesn’t mean the business is in good shape.

Often, the balance sheet is overlooked and is actually one of the – if not the most – important financial statement. A company can be profitable while incurring a lot of debt.
Debt means restricted cash flow and without positive cash flow, businesses fail. The balance sheet can be used to identify trends and make more informed financial accounting decisions. It is also important to lenders as they will use it to determine a company’s creditworthiness.

3. Cash Flow Statement

The What: This report shows how changes in balance sheet accounts and income affect cash and cash equivalents.

The Why: This report helps inform long-term decisions and the best use of this report – aside from seeing where changes in cash and other cash assets are – is to help estimate future cash flow which will assist with budgeting and decision-making.

4. Budget to Actual

The What: This report shows the company’s income statement account actuals versus what was budgeted for a particular period of time (usually reviewed monthly, quarterly, and annually.)

The Why: This report helps determine if particular areas of the business are not meeting revenue projections or in other words: Is spending happening like planned?

This also allows you to check to make sure expenses are being held to the set budget.

5. Accounts Receivable Aging Report

The What: This shows the amounts due from customers and separates them by days delinquent – 30 days, 60 days, 90 days, and so on.

The Why: This report allows an organization to stay up-to-date on what clients are paying for their services and which are past due on the amounts owed.
This report should be reviewed weekly to allow follow-up with anyone who is past due and possibly suspend services before the account gets too far behind.

6. Accounts Payable Aging Report

The What: This report keeps a finger on the pulse of your finances, enabling you to effectively manage invoicing and honor due dates. An AP aging report will help to identify the vendor payments that are past their due dates and to prioritize actions accordingly.

The Why: Running this report helps you stay on top of total expenditures and payment terms so you know you’re making the right payments to the right vendors, and ensures you aren’t carrying any delinquent liability accounts.

The Bottom Line For Your Bottom Line

Bottom line: Whether you’re a billionaire tycoon or a small business run from a home office, managing your bottom line is the difference between success and failure.

Check out our Ultimate Guide to Bookkeeping for more about small business bookkeeping.

Or if you’re ready to wave the white flag on handling your red and black margins, let one of BELAY’s experienced virtual bookkeepers help! Let’s get started today to get you paired with your dream bookkeeper.

You’ll regain your peace of mind – and wonder why you waited so long.