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Monthly financial reports can be an excellent tool for businesses. Owners and managers use them to make important decisions about business growth. They can help you decide where to invest money, understand what your company’s weak areas are, and more. These reports are typically created by an accounting firm or the financial or accounting arm of a trade registration firm such as the one you will find here: จดทะเบียนการค้า.
Let’s look at some of the benefits of having monthly financial reports generated for a business.
Types of Monthly Financial Reports and Their Benefits
The balance sheet is one type of monthly financial report. It compares assets to your equity and liability. The two columns should line up with each other when they are properly balanced. And they should give you the same total on both sides. Here are the benefits of a balance sheet:
- The balance sheet lets you know if you have all the proper and complete information on your company’s liability, equity, and assets. Discrepancies on the sheet can indicate an accounting error that needs to be fixed.
- It also gives you a great overview of your business. It creates an excellent comparison tool you can use from year to year to chart growth and change.
Profit and Loss Statement (P&L)
As the name suggests, the profit and loss statement is a monthly financial report that shows you your business expenses and income. It can tell you whether they resulted in a profit or a loss. This report will cover a specified period of time. Here are some of the benefits of the profit and loss statement:
- Like the balance sheet, the profit and loss statement is a powerful comparison tool to chart growth or lack thereof.
- Many businesses use this report to look for areas of improvement or to point out areas where they are doing exceptionally well. Sometimes the decision to expand or axe an entire department of the business will be determined based on this report.
- This report is an excellent reality check as well. It may seem like the business is doing poorly, but this report may show otherwise. The opposite is true as well. For example, many times businesses will think that they are making a tidy profit, but the report may reveal a different truth.
The cashflow statement is a monthly financial report that is like a more detailed version of the profit and loss statement. It shows all of the transactions over a period of time, covering both incoming and outgoing transactions. Here are some of the benefits of cash flow statement:
- This report can help a company make important decisions about how to spend money and spend it more wisely.
- The detailed analysis this report provides helps companies to avoid foolish mistakes that might have been made based on a less comprehensive report.
- This report also covers other aspects of the business that may not show up on other reports, such as loan repayment and debt.
Should Your Business Pay for Monthly Financial Reports?
This is a question that should be asked by every business owner or board of directors. Some businesses have a skilled accounting department that can handle generating monthly financial reports on its own. Even when that is the case, however, there are benefits to using a third-party accounting service. They can provide an unbiased look at your finances, for instance. And they may be able to catch errors that your accounting team did not.
It’s also worth pointing out that sometimes employees do skim money from their employers. Moreover, the accounting department is often the easiest place to do that. If you want to keep this kind of problem under control or prevent it entirely, a third-party accounting service can be beneficial. Basically, they can create the reports you need to run your business effectively.
Professionally generated monthly financial reports also help your business in areas of growth, spending, saving money, and budgeting. They can help you keep track of your finances and determine where money should be allocated.
If you’re not sure if monthly financial reports are worth the cost of hiring an accounting firm for, hopefully this article has shed some light on what they’re good for and why you might want to invest in the service. Small businesses can enjoy the same benefits as big businesses when it comes to professionally generated monthly financial reports.