Making sure your financial reporting is timely and accurate not only helps you better understand the performance of your business, but also helps you identify business opportunities for future growth.
When finance teams lack the right tools and use outdated workflows on clunky legacy software systems, they will struggle to generate actionable insights on time to guide their business.
The good news is that today's cutting-edge digital technologies can make reporting a breeze. Understanding how technology can improve financial reporting begins with knowing how today's advanced digital tools work.
CFOs and finance teams can become strategic leaders within the business by adopting a robust Cloud accounting software system allows finance teams to collect, manage, analyse, and deliver reports in real-time through automation which provides greater agility and precision than ever before.
What is financial reporting?
Financial reporting involves the production of formal records that give an up-to-date view of an organisation’s finances, including income, expenses, profits, assets and cash flow management.
Proper financial reporting is a statutory requirement, but these records also provide a crucial oversight to stakeholders, both internal and external, and they reflect the financial health of the organisation.
There are three types of financial reports which include:
- Profit and loss statements
- Cashflow statements
- Balance sheets
A profit and loss statement (also known as an income statement) shows your net income. In simple terms, this is your total revenue less your total expenditure.
A cashflow statement shows your short-term viability – as its name suggests, it shows how much cash is coming in and how much is going out. You might be extremely busy and generating a lot of business, but if you’re not receiving payments on time from your customers, your cashflow will suffer.
A balance sheet shows your assets and liabilities and is a snapshot of what you own and what you owe.
The information provided in financial reports is crucial when it comes to making strategic decisions about the business. Strong and accurate financial reporting is one of the foundations of a successful business. As well as helping you remain compliant, it provides you and other stakeholders an accurate summary of the health of your operations.
Additionally, it allows stakeholders to view the bigger picture of business performance, identify future opportunities, and make informed decisions about managing business activity for greater growth.
Why is financial reporting important?
The main reason for ensuring proper financial reporting is to meet your statutory obligations. Businesses must file accounts and pay the right amount of tax, and the authorities require you to provide documentary details of how your business is doing.
But it’s important for several other reasons, too.
It provides you with a neat summary of the information you need to be able to run the business properly, from the basics of “Are we making money?” through “Do we have cash on hand to meet our liabilities?” to the longer-term “Are we in a position to invest in a new factory?”
Financial reporting provides a snapshot of the information you need to make strategic decisions. It’s also useful for investors and creditors who require documentary evidence on the state of your business.
What are the benefits of financial reporting?
Financial reporting can benefit your business in a number of ways:
- Planning
- Debt management
- Cash flow
- Risk
- Productivity
The data contained in financial reports gives an oversight of your business and can help with your planning. Using financial software to generate your reports means you’ll be armed with up-to-the-minute data, which can help you spot any trends.
Carrying debt is not a problem unless you can no longer pay it back – and when that happens it can be too late to do anything about it. Financial reporting that tracks your cashflow, profitability and liabilities can help you manage your debt obligations. If you’re looking for finance, it’ll show you in advance what sort of repayments you can afford, and it can highlight any trends that might lead to a problem meeting any current obligations.
There are many examples of otherwise healthy businesses that have hit the buffers because of cashflow issues. They might have had long-term contracts, a good pipeline of orders and loyal customers, but a lack of cash coming into the company brought everything to a crashing halt. Financial reporting helps you monitor cashflow and should spot issues early on.
Financial reporting mitigates risk when it comes to inefficiencies or mistakes within your financial processes before they become serious problems. As well as being helpful for your bottom line, it can help prevent fraud and reduce the chances of falling foul of any statutory requirements.
In a more general way, financial reporting done properly can boost productivity. When you have all the relevant data at your fingertips and you are confident about issues such as cashflow, debt and risk, you can spend more time on the “day job” rather than worrying about what the financial state of play is. You’ll be able to make more informed decisions and there’ll be no need to rely on guesswork.
How Advanced Financials can help you achieve best practise financial reporting
Using a market-leading and trusted partner to help with your financial reporting will give you peace of mind that you’re getting all the up-to-date information you need, when you need it.
- Instant access means users can simply log into Advanced Financials online, wherever and whenever.
- Operating costs are significantly reduced, and access anywhere means you can accommodate the increasing mobility of the modern finance team.
- Empower your finance team with powerful, automated real-time reporting for timely analysis and decision making by key stakeholders
- Our robust KPI dashboards ensure that you can get an accurate view of financial performance, turning data into your system into crucial information which will drive business strategy.
- Use specialist sector functions for individual industry needs and financial management on the move to drive performance and growth.
- View information from across multiple offices in one system, for easy and effective financial management and an instant holistic view of your performance.
- Unlike other Cloud solutions on the market, user customisation is possible during and following the implementation process, meaning Advanced Financials can match your ambitious growth plans.
In a nutshell - increase agility and workplace productivity within your finance team by spending less time manually creating reports, and more time on value-adding projects.
With our Advanced Financials accounting software you'll have access to powerful and in-depth software for managing finances and automating manual tasks.
Whether you are making daily decisions or long-term strategic plans, we are here to help you make better, more informed decisions for your business. Get in touch with one of our experts today.
