Is it possible that business reports and their analysis might help you develop your business? Absolutely! Business owners and managers must elevate finance activities up the analytic value chain to implement a data-driven finance strategy. They can do it by providing more precise analytics, improved forecasts, and more granular data on products, suppliers, and consumers. Their assessments, in turn, educate the company, improve its agility, and indicate the way to cost reductions. Thus, the firm can make better decisions, become more agile, and save money.

There are a variety of financial reports and billing software for small businesses available that may be used to get insight into the financial status of a company’s history, present, and future. 

It is vital to have a yearly report prepared using a business expense tracker free of this financial data as a business owner. It will allow you to operate your company more efficiently, review operations more thoroughly, and make more informed business choices.

Here are the most critical financial reports you need to track

Whether you conduct your bookkeeping using financial reporting software or have an entire accounting staff, you need financial reports and small business financial statements, no matter what business you are doing.

1. Balance sheet

Balance Sheet

The balance sheet depicts your firm’s holdings, debts, and capital at a particular moment in time. It is possible to examine how these essential parts of your balance sheet have evolved from year to year by comparing them year to year. 

Such business reports prepared using billing software for small businesses will indicate whether or not your firm’s financial health has improved or worsened throughout this period.

More precisely, an item’s flexibility influences where it is positioned on the income statement. More current cash (for example, trade debtors and inventory cash) is categorized separately from less liquid assets in the assets portion of the balance sheet, termed existing assets. A similar distinction is used in the liabilities section, where current obligations are listed separately from long-term liabilities.

The balance sheet made using business expense tracker free contains critical financial measures that analysts and banks use to evaluate the health of your firm, such as the ratios shown below:

Liquidity is the ratio of current assets to current obligations. It is expressed as a percentage. Your company’s capacity to satisfy its commitments in the near term is referred to as short-term liquidity.

Monetary danger – The deficit ratio reflects the likelihood of financial distress that your company is exposed to.

2. Cash flow statement

Cash Flow Statement

Many firms do not prepare or do cash flow forecasting because of resource restrictions or just not knowing where to begin, despite being one of the most critical business reports a company can have. The cash flow statement prepared using financial reporting software shows how much money was earned and spent. 

It is possible to split a statement of cash flows into three primary sections: operational actions, financial operations, and cash flows. By comparing and contrasting these tasks, you may determine how successful your organization is in managing its operations.

It is the cash flow statement that displays the real movement of monies in your account. This is the point at which the income statement and cash flow statements diverge. Your income statement may show a highly positive figure for revenue, but if the majority of that revenue came via credit sales, your cash flow statement would not reflect this. In this sense, the currency is equivalent to reality.

There are two basic strategies for creating these business reports: directly and indirectly. Many billing software for small businesses may be configured to generate data that will allow the generation of a cash flow statement using the direct method of accounting.

The indirect approach is utilized more often because it combines data from the balance sheet and income statement. The numbers between these three financial statements may then be connected.

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3. Profit and loss statement

The profit and loss statement summarises your income, costs, and expenses for any given time. 

The profit and loss statement provides the most accurate picture of your company’s bottom line or net income, which is why it is often used to demonstrate to business leaders and investors whether your firm has earned or lost money over a specific time.

Your business’s net income is also used to determine its tax liability each year. This is calculated by subtracting your business’s expenses from its overall revenue, as shown on your profit and loss statement using business expense tracker free.

Those aware of the distinctions between cash and accrual accounting may undoubtedly understand that the technique you choose can significantly impact the statistics presented on your profit and loss statement. 

4. Sales report

Sales report

A company’s daily evaluation of the sales analysis report is one of the essential business reports we propose to them. This is because sales is a crucial figure – when sales are operating as expected, all other components will fall into place. It should provide more detailed sales information than the information in the other reports stated before using billing software for small businesses.

For example, sales statistics by crucial product lines, client categories, or sales representatives might be included in the report. It may also display quantities sold and post-discount pricing to calculate the average selling price for the day or the whole month at a glance. 

As a result, these figures may be compared to the company’s sales objectives to provide a clear picture of how sales have fared over a particular time.

Also Read: 15 Tips To Simplify Financial Reporting For Your Small Business

In conclusion

It might be enlightening to submerge yourself in your company’s bookkeeping and business reports. If you’re looking for a means to get a clear picture of your company’s financial health, use billing software for small businesses to prepare small business financial statements. 

These four financial statements are essential to becoming a more data-driven company owner. Please email us at or by phone at +1-805-491-9393 to schedule a financial reporting software demo.