Financial Statements and Your Company’s Financial Health
A lot of small businesses are using QuickBooks for their financial statement needs. The ability to view, customize and print reports puts QuickBooks above its competitors in the eyes of most entrepreneurs.
A lot of small businesses are using QuickBooks for their financial statement needs. The ability to view, customize and print reports puts QuickBooks above its competitors in the eyes of most entrepreneurs. You might be running various reports every once and awhile and think that you are staying on top of your situation, however; I recommend that you run and understand these 4 reports on at least a monthly basis. Looking at these reports frequently will give you a better understanding of your company’s financial situation. The best way to fine-tune your financial goals and forecasting is to know in real time, what your situation is.
Accounts Receivables and Account Payables Reports:
Accounts Receivable (A/R) –
A/R Aging Summary is the financial statement that will show unpaid invoices for the current period and for the last 30, 60 and 90+ days so you can see how long they’ve been open (outstanding). Customer Balance Summary shows each customer’s total open balances.
Accounts Payable (A/P) –
A/P Aging Summary is the financial statement that will show unpaid bills for the current period and for the last 30, 60 and 90+ days so you can see how long they’ve been open (outstanding). Vendor Balance Summary shows the total amount you owe each vendor.
These should be updated and checked at least weekly. The importance of this report stems from the fact that this report will tell you who owes you money and who you owe money to!
The purpose of the Balance Sheet financial statement is to list what you own (assets), what your debts are (liabilities), and what you’ve invested in your company (equity). The value of your company lies within the assets, liabilities an, equity of your company. The balance sheet gives you all of this information in details where you can compare different data such as previous year versus this year.
Profit and Loss Report:
The Profit and Loss financial statement otherwise known as the Income Statement reports money you earned (income) and money you spent (expenses) so you can see how profitable you are. The purpose of a Profit and Loss Report (commonly referred to as P&L) is exactly that. It will show you if you are making money or losing money. There is a choice to have a detailed report which will drill down and allow you to see individual transactions within your income and expense accounts.
Cash Flow Statement:
Cash generated by your business (operating activities), cash spent on your business (investments) and cash in or out from stock and dividends (financing). This financial statement will outline and report both your outflow and inflow of funds. One really good thing about this statement is that you can find out what the source is for both incoming and going funds. This is an awesome tool when you are trying to forecast future funds before making an important business decision.