Financial reporting is the key to business success, whether it is a freelancer, small business, or a team working at an enterprise level. Analysis has become imperative for all companies that want to gain an edge over competitors in this data-driven economy.
Gaining an idea on how to manage business finance can give a huge boost to your company’s financial performance. Moreover, you can invest in digital tools like financial reporting software to get the maximum results. Not only will you have access to the best insights, but also aid better business decisions. Before we discuss the importance of business reports for your small business, let’s know more about financial reporting and analysis and how it can help you manage business finance.
What do we mean by financial reporting and analysis?
Let’s say you need to monitor your company’s performance and take aligned actions to scale it and stay at par with competitors. In that case, you will need to establish transparent and smooth relationships with investors, potential partners, and creditors to help them assess your firm’s financial position.
Accurate records of revenue and expenses, cash flow, and profits can help you access insights and make strategic and intelligent business decisions.
In addition, financial reporting standards (national and international) need companies to keep these records safely and use them when preparing income statements. Besides, it is also necessary to document the company’s operating activities. Furthermore, income tax laws also require that these reports are generated for audit purposes.
Financial analysis is an excellent tool to evaluate a company’s financial information. It is done via key performance indicators or KPIs. Companies use these worldwide to assess and improve performance. However, they hold extra importance in financial accounting as they are used to determine and monitor its overall financial health.
Using financial reporting software that offers business intelligence and data analysis tools, finance professionals can access actionable insights and make the best use of financial statements.
Here are some of the financial statements used by small businesses.
- Quarters Report
- Invoice Aging Report
- Invoice Report
- Estimate Report
- Purchase Order Report
- Payment Report
- Stock Report
- Sales by Customer Report
- Sales by Product Report
- Sales by Task Report
- Profit by Product Report
- Purchase by Product Report
- Profit & Loss
Now that you know enough about financial reporting and business reporting software ask yourself the following questions.
- Do I need to optimize workflows and boost the company’s performance?
- How can I cut debts, strengthen my credit rating and significantly improve cash flow?
- How can I make better business decisions and improve compliance?
Effective financial reporting and accounting coupled with data management and analysis tools can help you slay all organizational goals and scale your small business. Here is why having business reports is a must for all businesses.
1. Get access to real-time analysis
A solution for multi business accounting is to use good financial reporting software. You can use it to generate forecasts, make reports, and better understand data models to make informed decisions and not make any blunders. When you have real-time visibility, you will stay two steps ahead of your competitors and take advantage of growth and opportunities that you may ignore otherwise.
2. Better manage your debts
Debt management should be a priority for any business that wishes to scale and grow steadily. Business reporting software will help you gain transparency in the whole process and improve operational efficiency. You can even integrate it with data management modules to access advanced analytics and manage debts with ease.
Besides, having the correct information on your assets and liabilities will help you generate more revenue and pay your bills. Moreover, you will be able to manage short-term liquidity, adjust workflows and processes, and plan long-term finances. This will ensure that you get the possible returns on every penny spent while paying your debts and you can manage business finance with no hassles.
3. Boost financial performance and aid compliance
Insights gathered from your business reporting software can be of great help when it comes to strategic planning and making tough best decisions. Besides, these are not just plain insights but ones that can generate long-term value by helping you grab opportunities, refine your processes, boost efficiency and speed significantly.
Most importantly, accurate financial data ensures that you’re fully compliant with tax laws and financial reporting standards. Besides, some software comes with compliance modules that help you consider investor protection laws and provide better services.
Last but not least, meeting tax obligations will become a whole lot easier. If in case your firm is subjected to an audit and valuation, you will be able to provide all details, leaving no scope of error and of course manage business finance better.
4. Smoother cash flow management
A large number of businesses quit within one year owing to cash flow problems. Even the organizations with the best teams are susceptible to market disruptions. In addition, businesses are still trying to recover losses post the pandemic. Poor cash flow management can even lead to your business being closed forever, and you will surely not want that.
But, with financial reporting software by your side, you can easily set and review your KPIs. This, in turn, will help you decide on your revenue streams and liabilities and develop a better understanding of your cash flow, devise management strategies and eliminate unpleasant surprises. Lastly, you will have a clear idea of the capital you have in hand and leverage opportunities as and when they arise.
5. Streamlined communication and collaboration
Role-appropriate access to financial data will help you distribute information, make better strategies and build strong relations with investors, creditors, and potential partners. Also, a solution for multi business accounting can help you ease the workload of your team.
Besides, real-time data analysis and sharing data help put everyone on the same page, allow teams to function with ease, and leave no space for communication errors and lags.
Business reporting software has an in-built custom dashboard wherein you can easily manage data for creditors and investors. You can even document key financial ratios such as ROI, P/E ratio, quick ratio, debt ratio etc.
Furthermore, clients are ensured that your company is committed to providing value, transparency, and compliance. These three parameters will help you, onboard clients faster and provide them with the best of services. Thus, it is imperative that you carefully choose a solution for multi business accounting for reporting purposes.
6. Effective risk management
Identifying and handling risks is important to a company’s financial health, data quality, and process optimization. But, luckily, financial reporting software can help you manage it with ease and save you tons of effort. This is how a solution for multi business accounting can help you.
- Identify and eliminate errors in your processes before they turn into big issues.
- Use AI and process automation to make improvements and improve performance accuracy
- Use predictive analytics to get insights and forecast changes in market conditions and develop a contingency plan
- Provide access to data-driven insights that aid in sound business decision making and business process management initiatives
- Mitigating risks of financial fraud by using higher levels of data encryption and spend management
Here are some KPIs it provides to help you stay on top of your financial needs:
- Cash Conversion Cycle Time
- Gross Profit Margin
- Net Profit Margin
- Working Capital
- Return on Assets
- Return on Equity
- Operating Expenses Ratio
7. Improved supplier relationship management
Making timely payments is the key to good relationships with your vendors. But, paying early to get discounts may not always be good for your cash flow. Sometimes, paying close to your due date is a good idea to have liquidity. You can also choose to delay payments if you have a sound relationship with your supplier. But ensure it does not become a habit.
Well, but these kinds of relationships don’t come from thin air. It requires building a solid reputation and tracking your vendor payment error rate. For example, you can have a healthy cash flow only when you have a disciplined schedule.
Choosing the right business reporting software will help you integrate vendor’ details. You can then use it for electronic invoicing, managing vendor catalogs, automating performance management, and compliance tracking.
The more data you have with you, the more efficient relationships and supply chain are. Besides, you will be able to identify opportunities and partner with key suppliers to improve sourcing, develop new products, and scale your business. All these factors can then boost your company’s performance and financial health over time. Thus, you must invest in a solution for multi business accounting as it can help you generate comprehensive reports in just a few clicks.
Having the right business reporting software can help you keep your records in order. Moreover, you can easily customize them as per your small business needs to get the maximum benefits and manage business finance.
Bank reconciliation reports, profit/loss statements, cash flow statements, financial analysis are keys to streamlined operations. You can choose to do it in-house or even outsource it for better results.
Are you still wasting time looking for the right financial reporting software? Fortunately, you don’t need to worry as we have your back. Feel free to call us at +1-805-491-9393 or shoot an email at firstname.lastname@example.org, and we will be happy to solve your queries.