The advantages of financial reporting become evident once you begin to think about the purpose it addresses inside and outside your enterprise. A financial statement can offer a clear picture of the financial situation of your company in real time. Keeping a track of your organizations finances can be the differentiating factor between failure and success. For instance, when you look at your financial statements, you will be able to keep your spending in check. Such close scrutiny of your finances can help you analyze if you have sufficient money to invest in the growth of your enterprise.
Financial reporting consists of three major statements, namely incomes statement, clash flow statement and balance sheet, with the last one being the most fundamental of all the three. The balance sheet displays the relationship between equity and liabilities and how they comprise of the total assets. The income statement, which is also known as the profit and loss statement, will display the profitability of the business during a specified period. The cash flow statement on the other hand displays the exchange of goods and accounts to cash and will show the transformation of a business’s finances from the accrual form to the cash form.
Here are 3 ways how financial reporting can assist your small business.
- Improved decision making
Financial statements are good decision-making tools. They are pointers that show a business trends and tendencies that show how a enterprise is collecting revenue and the rate at which the creditors are being paid. They will also display any irregularities that might obstruct the cash flow of your enterprise. For example, an accounts receivable report will display who is paying your enterprise on time and who needs more reminder notes or collection efforts. It will also show which customers are more trustworthy. In short, the accounts payable report will show you what your enterprise owns and to whom. These reports can also help you keep a tab on your firm’s inventory count and its valuation. Proper financial reporting is must-have to offer you with answers about your business. There are GAAP Finance Rules and Standardized Reporting Rules in place to ensure that financial reports are accurate. If your business has questions about debts, profits or inventory, financial reports are invaluable as they can help your business.
- Availing credit when you need it
Maybe it is growth strategy or a way to stay viable and afloat, but almost every enterprise will require credit at one point or another. This will include credit cards, business loans and credit lines with vendors. These lenders will require some type of guarantee that they will receive their money back within a specified deadline. To avail such a guarantee, the lender will wish to check a business’s credit report and balance sheet. This balance sheet will show an accurate statement of how much the business owns, while also displaying the present state of the cash flow. Your business could request for a internal accounts payable report that will keep your enterprise on top of the bills and increase your credit score at the same time.
- Stay compliant
Federal, state and local agencies will require you to submit quarterly tax returns on time. Your business will only be able to prepare for this if you have proper financial statements in place. For instance, a sales report will help you distinguish between nontaxable and taxable sales and thereby help you calculate the sales tax that you owe. A payroll liability report can help you present the tax obligations that you have associated with paying your resources. During an audit, you will be armed with all the information related to filing your taxes. Financial reporting can help you to fulfill such obligations.
Gaining an understanding of the benefits of financial reporting is the best way to keep your records straight. At Outsource2india we offer expert financial reporting services that can be customized to suit your needs. Our team of skilled financial resources can assist you with the preparation of a wide range of financial reports, be it bank reconciliation reports, cash flow statements, journal entries, balance sheet, financial analysis or operational analysis to name a few. By outsourcing financial reporting services, you can save on manpower, time and effort, while being able to take informed business decisions on the basis of professional financial reports. Stay ahead of your competitors and start outsourcing financial reporting services to Outsource2india today.
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