5 Important Accounting Reports for Small Business
Whether you want to obtain equipment financing, real estate loans, business lines of credit or a short-term bridge loan, you can be sure banks are going to ask you for several accounting reports. Here are a few reports you should always keep current:
Balance Sheets
A balance sheet is a report that tells you your total business assets and liabilities at any time. Rather than look at cash flow, balance sheets give you a list of assets such as liquid capital, unpaid invoices as accounts receivables, investments, real estate, owned equipment, vehicles, computer systems, and other salable items. Liabilities include any debts you have, from loans to unpaid bills. You want to see a positive number when subtracting liabilities from assets.
Profit and Loss Statements
Also known as income statements, P&Ls are one of the most important financial records you have. They’re great tools for you, and they also tell lenders about your business’s financial health. Correctly recorded P&Ls should provide details about several aspects of your company: total monthly income/sales, operating costs, other business expenses, and the adjusted profits you take home after everything is said and done. The point of this report is to detail what percentage of your sales actually ends up as profit, how much you’re reinvesting in your business, and where your costs are coming from. That way you know how much money you spend on payroll, training, inventory, rent, advertising, travel, internet, and other needs.
Accounts Receivable Report
An A/R report gives you detailed information about your customers. It can tell you who pays on time, who pays late and who still owes you money. If some customers always pay very late or have growing negative balances, you may want to make changes.
Customer Revenue Reports
This document tells you how much of your sales come from each customer. This can be valuable for investing your resources to take special care of accounts that are vital to your financial health. You can also look for ways to grow other accounts into solid buyers.
Accounts Payable Report
Your A/P aging report tells you how your company is doing when it comes to paying off your suppliers. This is important because it helps you flag any issues before they turn into problems that can affect your credit score.
Keeping careful records in business is essential for many reasons. For one thing, it makes it easier for your business to adapt to changing markets and continually evaluate how you’re doing when it comes to sales. Good accounting also makes paying taxes correctly much easier. Finally, tidy financials are a huge deal when it comes to applying for any type of commercial loan.
