A financial report is an official company document that showcases your business’s performance and activities over a specific period, such as a quarter or year. It organizes your financial data into a cohesive story that stakeholders, investors, banks, and regulators can use to understand your company’s health and make informed decisions.
To create a financial report, you need to collect and analyze all relevant data on your company’s current assets and liabilities. To do this, tally your company’s incomes and expenses using data sources such as sales invoices, purchase orders, expense receipts, bank statements, and payroll records. Next, reconcile those accounting balances with the current balance sheet by comparing starting and ending totals for each general ledger account. Once you’ve done this, you can then add up your totals to get a snapshot of your company’s current finances and identify opportunities for growth.
Investors and potential lenders want to know your company’s history of profitability and cost management in order to make an informed decision about investing or lending money to your business. This is why financial reporting is so important: it allows you to prove your business’s efficiency and stability over time.
Suppliers and customers also rely on financial reports to evaluate your business’s creditworthiness before starting a partnership or making a large purchase. Having a clear and comprehensive financial report can also help you establish efficiency benchmarks by comparing your current spending against similar companies in your industry. To streamline this process, consider partnering with a expense tracking tool like Fyle, which connects directly to your business credit card to automatically match receipts with company transactions.