5 Useful Financial Reports your Bookkeeper can Prepare for you
When you own a business, staying on top of financial matters is a non-negotiable responsibility. Bookkeepers, as well as managing your cash flow, can produce financial reports that easily lay out how your business is performing. These reports help inform your forward planning and business management, and enable you to make informed decisions.
Here are five of the most useful financial reports your bookkeeper can prepare.
1. Profit and losses statement
All bookkeepers can prepare a profit and losses (P&L) statement, also known as an income statement. This is a summary of your business’ revenue, costs, and expenses over a particular period, such as quarterly or annually. The P&L statement will have divided all of your business’ incoming and outgoing expenses into clear categories such as revenue, marketing, taxes, and cost of sales to give you an overall net profit.
2. Balance sheet
Bookkeepers will also produce a balance sheet that summarises all of your business’ assets and liabilities. This sheet is useful in calculating your small business’s worth, rather than just the money in the bank. If at any moment you were to sell all of your assets and pay off all your business debts, a balance sheet would tell you how much you would have left remaining.
3. Cash flow statement
A cash flow statement can also be prepared by a bookkeeper. This document will detail all of the money flowing into your business, and any outgoing funds related to business activities and investments. In other words, it will tell you how well your business can generate cash. Cash flow is essential when it comes to paying loans, taxes, or purchasing new assets.
4. Net profit margin over time
Your bookkeeper will also be able to track how much profit you make from each sale over a given period, known as your net profit over time. This will indicate how profitable your services or goods are, which eventually boils down to how profitable your business is as a whole.
5. Accounts receivable and accounts payable days
Accounts receivable days (AR days) is the number of days that it takes you to get paid for the products or services you offer – in other words, how long it takes before your invoices are paid. Accounts payable days (AP days) is how long it takes you to pay your suppliers. These two figures determine how efficient your business is at both collecting and paying out money, which both impact your company’s cash flow and liquidity.
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