A financial report is a detailed snapshot of a business’s finances for a period, such as a quarter or year. It shows how much money is coming in and where it’s going out. This information helps investors, lenders and stakeholders understand a company’s performance, current debt, and potential future profitability. It’s also required by law for most public companies.
When creating a financial report, you must collect and organize data from sales invoices, purchase orders, expense receipts, bank statements, and payroll records to create an accurate picture of your business’s financial health. This process may seem tedious, but with the right tools, you can streamline the process and reduce manual errors. Using software that lets you scan receipts automatically and import transaction details into an Excel sheet can help you make this process easier and more efficient.
The three main types of financial reports are balance sheets, income statements, and cash flow statements. Each type of report contains a different set of information and has its own unique purpose. A balance sheet, for example, reflects a company’s assets, liabilities, and stockholders equity as of a specific date. It’s important that this information is clear and concise so it’s easy to read and understand.
A good way to improve your company’s financial transparency is by comparing budgeted vs actual statements. This can help you identify inefficiencies and make strategic adjustments to stay on track with your financial goals. This step is especially crucial when you’re seeking out new investments or lenders.