What are the key reports to focus on in your business? We’ll show you how to track performance, take action and prepare your company for surviving the new business normal.
As a business owner, it’s always been helpful to have an understanding of accounting – but in the post-lockdown world, it’s never been more important to have a good grasp on your finances.
With the business world irreparably changed by the impact of coronavirus, your business is facing a ‘new normal’. Priorities have changed, customer behaviours have mutated, and revenue streams have had to evolve and pivot in order to create a viable post-lockdown business model.
To track, monitor and drive your financial performance in this new business world, it’s increasingly important to have a handle on your key financial reports and metrics.
Getting to grips with your financial reports
Whereas in the past, extra cash in the business may have been seen as a surplus that needed to be spent on something, COVID-19 has shown us that having these reserves is vitally important for the survival and long-term health of businesses.
To truly be in control of this cash, it’s vital that you can dip into your accounts, financial reports and dashboards and ‘see the genuine story’ behind your financial position.
So, what are the key reports to focus on? Let’s take a look:
Budget – This is a financial plan which is part of your strategic short- or long-term goals. It is what you expect to spend money on and what you anticipate your revenue to be. It also estimates your profit position and allows you to compare your estimates with actual figures so determine variance and adapt for the next year.
Cashflow Statement – this report shows how the money flows in and out of your business and assist you to reach a positive cash flow position, meaning you have surplus cash in your bank account. It is hoped that you have enough cash to cover your expenses, fund any purchases through loans and can generate a profit.
Balance Sheet – This report states your assets, such as cash and assets, your liabilities such as ATO debts, Superannuation liability, creditor’s and equity, which is an accumulation of your net profits or losses – or the value of the business at a set point in time.
Profit & Loss Statement – This statement reports your total revenue and costs over a period in time. This is different to the cash flow statement as it focuses on income and expenses only (not loan repayments or GST for example) You can use it to compare different reporting periods and historical periods.
Talk to us about accounting and financial reporting for your business.
We’ll run you through the key reports in your accounting software, and can help you track performance, take action and prepare your company for surviving the new business normal.