Tue Apr 14, 2020 | | Financial Reporting

3 Top Reasons To Invest in Monthly Financial Reporting


CFO Report

As I’m meeting different business owners, there is a difference between the businesses that are thriving and the businesses that are struggling. The common theme in struggling businesses is that they are not receiving monthly financial reporting.

These businesses are the ones that truly don’t understand how their businesses are performing financially. As a result, decisions are based on gut and feel, assumptions, and speculation as opposed to actual financial data.

We have found that the one common theme with thriving businesses is that they receive monthly financial reporting and measure their actual results against budgets and business plans. This not only allows companies to track how they are doing but also allows them to make changes to their plans to enable growth.

1. Informed Business Decisions

Do you know if you’re making money? Do you know whether each product or service you sell is profitable? Financial reporting allows business owners to determine whether or not they are making money and fully understand their business’s profitability. Consequently, it will enable owners and key personnel to make better, more informed business decisions without relying on gut and feel.

2. Tax Planning

One of the most common goals of business owners I have come across is that they would like to minimize their tax burden. Too often, the business owner’s outside CPA is stuck in the weeds working on accounting entries instead of adding more value to businesses by strategies with business owners about the tax implications of certain business decisions. By having monthly financial reporting, you are now in the driver’s seat to work with your outside accountant to understand the tax implications of findings and to guide your business in the most beneficial direction.

3. Obtain Lending

Banks and other 3rd parties will need and rely on financial reports to determine if they are willing to lend to you. That lending, in many industries, is critical to business operations as receivables may not be collected for 60-90 days. Financial reporting, in some cases, maybe the most vital tool that keeps your company in business.