Now that the year is coming to a close, it’s time to look over some of your financial reports. Reviewing your financial reports before the end of the year can make a big difference for your business, because this practice will allow you to reflect and plan for the year to come.
You can expect the results you see now, to help you in the year ahead.
Analyze the following reports to set your business up for future success.
Financial Reports to Analyze at Year-End
1. Cash Flow Statement
By reviewing the cash flow statement, you can assess the overall health of your business. In this report, you’ll find information on how much money you have in your accounts at any given time. Additionally, you can see when money is coming into your accounts and when money is leaving your accounts.
It is extremely important to review this statement.
When you analyze this report, look for a steady stream of income. If you do not have a steady cash flow, you will need to make some major changes.
2. Profit and Loss Statement
The profit and loss statement, also known as the income statement, helps you see how much money your business is bringing in and how much money is going out.
Once you have determined these numbers, you should compare them to last year’s profit and loss statement. Ask yourself:
- How much did my business make last year?
- Did we spend more or less than the previous year?
- Are my business’s finances growing, remaining constant, or declining?
Your answers to these questions should greatly influence your plans for next year.
You will also want to review the profit and loss statement to see if your current budget is on track.
- Did you spend more or less than you budgeted for?
- Did you have more or less money coming in than you expected?
By looking over these numbers, you can build a stronger budget for the upcoming year.
3. Balance Sheet Report
The balance sheet gives insight into your company’s assets, liabilities, and shareholder equity. In other words, this document can show you what the company owns and what the company owes. It also shows you how much shareholders have invested.
This information will impact your decisions for the upcoming year. You will want to look at your assets, particularly your cash, and see if you can put any of that money toward your liabilities. If you don’t have a great deal of excess cash, you might see how you could make adjustments in order to save a little more in the future.
4. Budget vs. Actual Report
A budget vs. actual report is exactly what it sounds like. This report compares what you budgeted for the year to the actual amounts that you spent.
When it comes to running a business, no year is alike. Because of this, It is crucial that you modify your budget to better fit the current position of your business. The budget vs. actual report will help you figure out which areas of the budget need to be altered and which parts can stay the same.
5. Net Profit Margin Report
The net profit margin is similar to the profit and loss statement, but it offers a more thorough look into these numbers. This report is designed to help you see how your revenue translates into profit and more specifically, it lets you see if your expenses are lower or higher than your revenue.
Experts recommend that you use this report to compare your profit margin to the profit margins of other businesses in your industry. If your numbers are drastically different from the reports of your competitors, you will easily be able to see your business’s strengths or weaknesses.
Overall, this report will allow you to determine if your money is being spent efficiently. You will definitely want to analyze this report at year-end.
6. Accounts Payable Aging Report
This report is essential if you want to keep your vendors happy. The accounts payable aging report tracks the money you owe to other businesses. It shows all of your bills, along with the details of your billing statements, such as how much the bill is for, when it needs to be paid, etc.
Reviewing this report will help you get a better idea of how you’re spending your money. It might also help you find ways to save money.
For example, if you’re unknowingly paying bills late and accruing late fees, this report will make you aware of that issue.
Use this document to see how much money you owe and allow it to assist you in making smart choices as you move into the new year.
7. Accounts Receivable
The accounts receivable report is the opposite of the accounts payable report. The accounts receivable report outlines who owes you money. You can also see when your vendors pay you and how much they need to pay.
You’ll also want to review this statement to ensure you aren’t missing any old invoices and everything is collected and up-to-date.
If your business seems to be struggling with cash flow, this report could provide you with a lot of valuable information. Be sure to review it before you create your annual plan.
8. Weekly KPIs
Weekly KPIs, or Key Performance Indicators, help businesses measure their progress. You should review these reports weekly. However, by reviewing these reports again at the end of the year, you can see how your business performed week by week.
For example, you could see if you met your weekly financial goals in the first quarter or if you hit your weekly operational targets during the month of May.
These documents should give you a very detailed synopsis of your company’s performance over the past year, and they will be extremely helpful when it comes to annual planning.
Ready to Improve Your Financial Reporting?
Financial reporting is extremely important, and if you want your business to thrive, it is essential that you run these reports and evaluate your financial standings. Review these reports as soon as possible so you can use this information to your advantage in the year ahead.
If you need assistance compiling and analyzing these reports and preparing for the year ahead, Pasquesi Partners can help. Contact Pasquesi Partners today!