A financial report contains detailed, accurate information that provides a clear picture of your company’s financial status. It’s essential for analyzing historical performance and making informed business decisions in real time. Financial reports can help you identify problems and set SMART goals for future growth, and they serve as a vital tool in compliance with regulatory requirements.
Depending on the type of business, your organization may produce one or more types of financial reports to meet specific needs. The most common are the income statement, balance sheet and statement of cash flows. The income statement includes the company’s revenue, expenses and net income (or loss) for a fiscal period. The balance sheet shows the relationship between what a company owns (assets) and what it owes (liabilities), including shareholder equity. The statement of cash flows records the flow of cash in and out of a business, including operating activities (e.g., cash received from customers, cash paid to suppliers and employees) and investing activities (e.g., purchase or sale of fixed assets).
When creating a financial report, it’s important to include all the relevant information and present it clearly. Use plain language and avoid jargon, and double-check all calculations, data and information for accuracy. Make sure your report complies with accounting standards and regulatory requirements, and have someone else vet the document to catch any errors or inconsistencies. Automated software streamlines financial reporting, freeing up resources to focus on strategic projects.