New Year – a time of new beginnings; of putting into action the lessons from last year; to discover new ways to improve and what better time to set a new course in our businesses?
As this year comes to a close we encourage business owners to take some time to step back and reflect on your businesses as you think of all the things that are to come your way this coming year – are you looking to improve your products and/or services? Perhaps grow your business to reach more customers? In this week’s blog we hope to give you a few ideas to ponder as we share some of the many ways in which financial reports can help your business.
6 Ways that financial reports help your business grow
Your business generates lots of data. Every sale, every purchase and every transaction creates data. Business reporting helps you use this data intelligently. The financial business data that you collect every day can be used to generate a wide variety of reports that can:
- Identify Profitable Products. Analysing the rate of sales for products or service packages you sell provides especially valuable information. If a product is flying off the shelves, you may have priced it too low. Or it may be time to tweak the services included on a package that isn’t selling well. This information may not be obvious until you compare your products performance side-by-side in a financial business report.
- Track Your Clients. For service-oriented businesses you might ask why are you spending 12 hours working on a client project and only getting paid for six? Seems your estimate was too low. Or are the unbilled expenses on a project so high that you ended up with no profit? Business reports can help you track in real time how long a project should take and what it takes to complete a project. You might also ask – what do you do about clients who are chronically late with payments? An Income by Contact report shows total revenue generated by each client over the time period you choose and an Accounts Receivable Ageing report will show you who needs a late payment penalty clause added to their contract.
- Watch your Cash Flow. Businesses have expenses, which they can’t pay without regular income. A Cash Flow Statement shows the flow of cash as it enters and leaves your business. You’ll get a sense of how healthy your business is and how quickly you will be able to respond to changes in your market. A Profit & Loss Statement (P&L) shows your income over a time period, less your expenses. If your expenses are surprisingly high, take a look at the Expense Detail. You’ll immediately see what category is costing you the most, giving you the opportunity to make necessary adjustments.
- Identify Competitive Trends. Although many industries have slow or busy trends throughout the year, if a profitable product suddenly decreases in sales, then you can check to see if competitors have lowered prices or added a new offering to that particular line of merchandise.
- Insight into Employee ROI. Return on investment can be difficult to track, but a Revenue by Employee report will show you at a glance who your greatest asset is and who might need to improve. Not only will you be able to identify who your most valuable employees are, but you’ll also have the opportunity to open a dialogue with an employee who may be underperforming. Do they need an additional team member assigned to their project? Or additional tools to improve efficiency? Helping a current employee is always more cost efficient than hiring a new one.
- Leave a Paper Trail. In addition to helping you make decisions about your company and its future, financial reports help you build a paper trail of your past. If you ever approach a bank for a loan or decide to sell your business, you‘ll need to produce more than your personal income tax returns to support your requests or your asking price.
Generating reports, like the demo examples we mentioned, is much easier using an online bookkeeping software, and a certified bookkeeping professional can make sure you are getting the most out of the reports. Cloud-based accounting software applications such as Xero make running many of these reports a breeze, allowing for up to date financial reporting at any time anywhere.
The New Year is a fantastic time to take stock of your business and position it for growth in 2020Shelly
For greater insights into your business there are a range of add-ons, for example Workflow Max that will allow reporting into an employees time usage and allow you to easily track the costs associated with projects. These add-ons integrate with your accounting software minimising time and costs associated with running your business. Having a cloud bookkeeper at your service ensures all aspects of your business are accounted for. The New Year is a fantastic time to take stock of your business and position it for growth in 2020.
Shelly’s Bookkeeping Brisbane can help you understand and run financial business reports essential to running your business efficiently and profitably. By having a Certified Bookkeeper you’ll learn to understand these financial reports and how to use them to predict trends and identify opportunities for future success.
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