Stay in Control with Reliable Accounting Reports

27 Jun 2022 | Finance

About the author

Hooshang Bakht

Savage & Palmer was started with a mission to make entrepreneurship easy. Our goal is to help business owners grow and scale without having to deal with the day-to-day stress of running a business. We specialize in providing services that help business owners grow their businesses, including search engine marketing (SEM), social media marketing (SMM), LinkedIn marketing, video production, accounts receivable (AR), accounts payable (AP), internal audit, VCFO, and recruitment. We have helped more than 500 brands grow their businesses. We work closely with the clients to understand their unique needs and develop customized strategies that deliver measurable results.

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Why Your Business Depends On These 4 Accounting Reports!

Whether you are about to set up your Dream Business or you are currently a Small Business Owner, there are some essentials functions that you must know in order to keep your business running. The most neglected of these essentials functions is by far Accounting. Believe us when we say this, NOBODY WANTS TO DO ACCOUNTING! No business owner cares about how accounting reports will be managed when they first start their business, and 90% of the time, they still don’t care about it even when their business starts to flourish. And why should they? They have a personal CA or an In-house accounting team that does it all for them! Right there! Now that’s where the problem arises. 

By refusing to understand and by turning a blind eye to these 4 Primary Accounting Reports, you are depriving your business of growth, improvement and expansion.

Income Statement / Profit And Loss Statement:

This is by far the most important statement that is a make or breaks for your business. Understand this, a Profit and Loss sheet tells you exactly how much money you spent on your business and how much money you earned in total. Most business owners just look at this sheet at the end of the year and don’t care much about it so long as they are making a profit. But without a thorough understanding of this statement, your business is making a loss, even if you are profiting.

Take some time out of your schedule to look at which product/service of yours makes you the most money and where you can curb needless spending. Get to know what’s working out for you and what isn’t and make sure that you are spending the most time on things that make you the most money. This analysis is so important that at Savage and Palmer, we offer our clients monthly MIS reports, giving them key insights in a visual and graphical format about their company so that they can take better informed strategic business decisions.

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Balance Sheet:

At a certain period of time, what your company owns and what your company owes is something that is given in detail in your balance sheet. All of your short term assets eg: Cash, should be in line with your short term liabilities eg: Taxes, so that at the end of the day, you have money to spend in order to grow your business. Business owners should keep an eye on this sheet because it tells you if you are taking too many loans, without actually having the money to pay them off in time.

A balance sheet makes you aware of your real financial position in the market without any sugar coating. This is extremely important because business owners live in a bubble and receive a heart attack when they realize the amount of money they owe people and organizations.

Accounts Receivable Aging Report:

As a business owner, it’s important to have everything set up in your business and functioning smoothly. However, even if you offer and do everything from your end, you may still face the problem of customers not paying you. This can have a significant impact on your business, which is why it’s important to track this down via an Accounts Receivable Aging Report. This report helps you classify your customers according to those that always pay late, those who pay on time, and those who have recently started slacking on payments.

Analyzing the type of customers that regularly pay late is critical because it enables you to take action and stop working with them effectively immediately. This type of information is not usually given by your In-House team until the end of the year or will usually be given to you incorrectly. Therefore, you must take charge of the situation and flesh out this information personally. At Savage and Palmer, we understand the true importance of accounting reports like the Accounts Receivable Aging Report and make sure to regularly update our clients about their debtors. This saves them the time and trouble of verifying it and doing it themselves.

Regularly checking and analyzing accounting reports like the Accounts Receivable Aging Report is crucial for the success of your business. It helps you identify potential issues early on and take corrective action. By working with a reliable accounting firm like Savage and Palmer, you can ensure that you have access to accurate and up-to-date information about your business’s financial health. So, don’t hesitate to take advantage of accounting reports and get the insights you need to make informed decisions and drive your business forward.

Accounts Payable Aging Report:

You know how it feels to not be paid! Don’t make your vendors go through the same experience and pay them on time! This report makes you aware of the people that you haven’t paid yet. It also makes you aware of the fact that your accounting team probably isn’t as good as you thought they were. While you recover from that setback, this may also be a sign that you should pay more attention than you do on this particular report.

Although the traditional mentality is to withhold vendor payments for as long as possible, if payments are not made in time, you will spoil relationships that potentially benefit your business as well as create a bad reputation for yourself in the market. This may lead up to a point where no one would want to work with you. Yes, it’s that serious! Our clients at Savage and Palmer, on the other hand, do not have to worry about this because we always make sure that we manage all their vendor payrolls to the ‘T’, thus, saving their time and their reputation.

All of these 4 reports are very important with respect to the overall business operations of your company. By paying attention to them, you are making sure that nothing comes between you and the growth of your business. Always remember that the development of your company is in your hands and by focusing on these essential accounting functions, you are creating a strong foundation for future progress and evolution. It is common knowledge that accounting reports can be boring and confusing. But at the end of the day, you will have to keep an eye on these reports, if you care about the future of your business. Or, you can hire the best to do this for you.

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Frequently asked questions

Q: Why do I need to keep track of my business accounting reports?

A: Keeping track of your business accounting reports helps you monitor your financial health and make informed decisions about the future of your business.

Q: What types of accounting reports do I need to generate for my business?

A: Some essential accounting reports for business include balance sheets, income statements, cash flow statements, and tax returns.

Q: Can I generate these accounting reports on my own, or do I need to hire an accountant?

A: You can generate these reports on your own, but it's recommended that you hire a professional accountant to ensure accuracy and compliance with regulations.

Q: How often should I generate accounting reports for my business?

A: It's best to generate accounting reports at least once a month to track your financial progress and make necessary adjustments.

Q: What are some benefits of using accounting reports for my business?

A: Some benefits include understanding your cash flow, monitoring your expenses, identifying potential areas for cost-saving, and making informed financial decisions.

Q: How do I analyze my accounting reports to make informed decisions?

A: Analyze your reports by looking for trends, comparing current data to historical data, and identifying areas where you can improve or cut costs.

Q: What is the most important accounting report for my business?

A: It depends on your business needs, but the income statement is usually the most crucial report as it shows your revenue and expenses over a given period.

Q: How can I use accounting reports to prepare for tax season?

A: By regularly generating accounting reports, you can easily track your income and expenses, making tax preparation less stressful and more accurate.

Q: What if I don't understand my accounting reports?

A: Consider hiring an accountant or taking an accounting course to improve your financial literacy and better understand your reports.

Q: Are there any tools or software that can help me generate accounting reports for my business?

A: Yes, there are many accounting software options available, such as QuickBooks, Xero, and Wave, that can help you generate reports quickly and easily.