Financial reports are essential for any type of business, they provide a series of useful pieces of information that help increase efficiency in daily activities and achieve goals in the period of time required. Here at Nudge Accounting we help you have financial information organised in a way that it is easier for you to make the right decision in the right moment; something that is essential for any CEO, here at Nudge Accounting you will find that service.
These are some of the benefits top financial reports can provide you with:
- Know how healthy your company’s finances are.
- Have quality information to make management decisions.
- Analyse the evolution of a year compared to the previous one.
- Give publicity and transparency of the financial status of the company.
- Check the health of your customers’ financial statements.
- Check the health of your suppliers’ financial statements.
- Compare your financial statements with those of the competition.
- As documentation attached in financing applications.
- To argue and value a company in a transfer.
An entrepreneur without financial statements would not have that valuable information to perform two of its most important functions: make sound decisions and control whether the desired results are being achieved.
The financial statements are of great importance and relevance to the employer, who must demand the presentation and explanation of the states in the first ten days of each month. The financial statements are an “X-ray”, the “thermometer” that marks the success of a company.
They must be analysed on a monthly basis by the employer and by the Board of Directors, if it exists in the organisation. The financial statements contain a monthly breakdown of the income that was obtained, before and after taxes. They also show the deductions we made, which allows you to take into account the expenses that we must consider in our accounting system to correctly report our tax payment.
They also include a list of the expenses incurred and the variations in money that were made during the year.
The utility: Financial statements are useful for various reasons, depending on the person who requests them and consult them. To the individual users it allows them to know how much they spent, saved, invested, etc., which tends to translate into a better planning for the following year.
When valuing the excessive expenses in some areas and the benefits in others we can reflect and design better tactics to correct errors and take advantage of successes.
Those who run a business let them know how profitable it is and make it easier for them to compare the company’s actual performance annually. These documents must be saved in order to compare them with each other and know, with real numbers, which year was better. We must remember that empirical perception is usually imprecise and leads to errors.
Creditors and potential grantors of financing can help them to know how the user’s or company’s finances are, to determine the risk of the operation and the ability to pay.
If a financial statement is good, it can help you get good credit, mortgage or financing.
Financial statements are important because they are serious documents with official validity that allow you to have a very organized idea about finances. They help not only to see the past, but to learn from it to improve the following year. They also allow to study in a clear and efficient way what was saved and what was spent more.
Projection and Growth of the Company
Without reliable information on what actually happened in different periods of the company, it is impossible to project the growth of it. Unfortunately, financial information is distorted by multiple factors due to the incorporation of events that are not specific to the entity, for example:
- Withdrawals of Resources by Owners and Executives that will not have a return and become an early withdrawal of profits that have not yet been obtained.
- Excessive remuneration of Directors not according to the reality of the position. You think about the person and not the company.
- Incorporation of Expenses for different concepts that reduce profitability. In spite of being real expenditures they do not correspond to the company’s needs for its operation.
- Reduction of profitability for tax purposes that decrease the distribution of profits and do not allow the compensation of advances and withdrawals of the partners, resulting in an unrealised receivable.
- Little investment in the future of the company, delegating the totality of the growth of the same to the external indebtedness and not to own resources.
- Financial information is reduced to compliance with legal obligations.
- Excessive thinking in the short term.
- It is confused between the remuneration of the Owner as an employee and as an Investor, which makes it difficult to understand the profitability of the company.
- One situation is to distribute surpluses and another to satisfy the particular wishes of an owner justified in the obligation of the company to cover them without measuring consequences.
- The company is the sole sustenance of the employer and must take care of it as it runs the risk of losing the main source of obtaining resources-.
- It will surely be a new contribution for your process of implementation and sensitisation to the Management, Managers and Owners.
It is considered that the analysis of financial statements is a method, which applied to any company allows you to accurately assess your financial situation allowing you to know in what condition you are, make the right decisions and observe the change of the organisation. It is also important to mention that the most important process of a business is the decision making, which requires knowing the information and financial analysis tools that should be used to dictate the most appropriate way to act.
If you need to have more control of your bookkeeping and finances, here at Nudge Accounting you will find a professional team to help you lower expenses in possible mistakes your current finance plan may have. that are your competitors.