Financial reports and statements are crucial business tools managers and business owners use to evaluate and monitor their business performance. Alongside other metrics, information from financial reports and statements helps business organisations to make informed decisions and achieve their overarching business goals.
Business managers utilise three important financial statements in business operations: the balance sheet, cash flow statement, and income statement. These statements can be performed or outsourced to financial agencies, such as https://www.michigancfo.com/. The balance sheet lists the business’s assets, liabilities, and equity, thereby giving a snapshot of its financial health; the cash flow statement details how cash enters and leaves the company; and the income statement shows the income and expenses at a particular time.
Here are seven ways you can use your financial reports and statements to achieve business growth:
To Evaluate The Impact Of Your Decisions
Running a business is about making decisions. From time to time, business owners and managers have to make decisions that’ll determine the direction of the business. Business managers must evaluate the impact of their decision on the company. As a business manager, looking into the business’s financial reports and statements can help you know how you’re faring. By comparing your expenses with your revenue, you can determine if you’re making investments paying off or needing to make changes.
To Prepare Budgets
Financial statements and reports can aid businesses in preparing their budgets. To prepare a budget, you’ll need a reference point. It’s a record that shows what you have, after which you can begin to allocate available resources to tasks and projects. The information from financial reports and statements acquaints you with the available business resources and helps you disburse the right number of resources to the appropriate tasks. Hence, the business can perform necessary tasks and achieve set goals, translating into growth.
To Boost Team Morale
Your business’ financial statement can also be used as a stool to boost your team’s morale and drive them towards higher levels of engagement. Your income statement, for example, shows how your teams’ actions have contributed to the business revenue. Team members get a psychological boost when they realise their efforts yield positive dividends for their organisation. Giving them feedback could further fuel their performance and increase their drive to do more. This, in turn, helps the business to become more effective and efficient.
To Make Investment Decisions
Investment decisions are critical business decisions that shouldn’t be made wrongly. To make investment decisions, business stakeholders often come together to analyse the investment opportunity and evaluate the pros and cons of the decision. Having accurate financial statements enables stakeholders to make informed investment decisions. When a business has a valid financial state, owners can make investment decisions that won’t hurt it. Rather than making baseless decisions, a business manager can make wiser investment decisions by leveraging the financial information at hand.
To Secure Loans
Banks and other lending institutions are keen to check the financial state before lending it money. Businesses that can’t tender their financial statements have very slim chances of securing loans. However, an accurate financial statement analysis allows lending institutions to have a holistic and unbiased view of the business’s financial health, which helps them make lending decisions. If your financial statement shows that your business is making profits, you’re more likely to secure a loan.
To Regulate Tax Payment
Your financial statement, alongside your financial report, shows you both your income and expenses. A clear overview of our costs can help you regulate the taxes you pay over your business by minimising certain expenses. The monies you save from cutting off some costs can be channelled towards other profitable ventures that could enhance the productivity of your business and generate more profit.
To Plan For The Future
Financial statements and records show what your business has achieved or is currently achieving but not what it’ll achieve in the future. You can use what has happened in the past or is happening at the moment for business future-proofing. By looking at past trends, you understand what you need to do to scale and remain in business in the future.
You can position your business for higher performance and turnovers by having accurate financial statements and records about your business and leveraging the information they provide to make informed decisions. If you’ve been taking your records lightly, you should begin to take them more seriously now. Or wouldn’t you love to see your business grow?