Monthly Financial Reports For Business Owners

Feb 11, 2021

5 Most Important Financial Reports Every Business Owner Should Review Monthly

The more you know about your company’s finances, the better you can optimize your budgets and see profitable areas of your business. Financial reports can help you lean into profitable products/services and adjust or discontinue products that are not financially viable.

When small business owners follow their finances closely, they can also improve their personal wealth creation. Optimizing profit margins and reducing expenses can give you more to invest in wealth creation.

Most important types of financial reports

One of the largest success factors for a business is financial management. Here’s a look at the reports you should be reviewing monthly. We’ll also explain what to look for in these reports to optimize them.

While there are many reports you could run to understand your finances, we explain the top five monthly reports you should be reviewing.

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1. Income Statement

An income statement shows your income and subtracts your expenses. Review these reports monthly but also do quarterly and annual comparisons. By comparing this statement regularly, you’ll be able to see where your sales are decreasing or why expenses are increasing.

As you review your income statement, there are a few things you want to look at.

  • Margins
  • Percent of income going toward expenses
  • Before-interest earnings
  • Taxes

2. Balance Sheet

Your business income tells one story but understanding your assets and liabilities will further explain your financial position. A balance sheet evaluates all assets, liabilities and equity. You should compare your balance sheet year over year.

This report tells you your financial health and makes it easier to see improvements and declines. Something to consider as you review your balance sheet is the liquidity of your assets in comparison to your liabilities. This will tell you whether your business can meet its obligations.

It might take some time to learn how to read your balance sheet. However, we cannot stress enough the importance of understanding financial statements. Ask your financial advisor or accountant questions to understand what your balance sheet is telling you.

3. Cash flow statement

Cash flow statements show you where your income came from and what expenses that income went to. Areas of your cash flow statement you’ll want to pay close attention to include:

  • Operating activities
  • Investment activities
  • Financing activities

Financial statement analysis of your cash flow will provide operations insights. Your cash flow statement will likely look like a combination of your income statement and balance sheet.

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4. Working capital report

Working capital shows business owners money that they can use to cover operations expenses. It will show you your bank account reserves and outstanding liabilities you need to be prepared to pay.

This report helps business owners mitigate the risk of not being able to pay the bills. It provides you time and warning to adjust your expenses and request credit extensions to avoid late fees or non-payment on an expense.

As you review this section of your report, you also might notice that you aren’t using loans effectively or need to renegotiate these loans.

5. Sales analysis report

A sales report might be the most important financial statement you review. Your sales leaders should be reviewing reports more often than monthly. It tells your team whether they are on target for goals or need to make adjustments.

Viewing this report regularly will help you make adjustments before it’s too late. The business owner will be most concerned with product lines and customer segments that are excelling. Your sales leaders will likely also review what sales reps are performing well and meeting their targets.

Preparing corporate financial statements

Preparing financial reports is time-consuming, yet crucial to business success. If you and your team are struggling to find time to complete this important activity, contact us. We’ll help you prepare and read your financial reports to guide you in improving your business’s bottom line and reinvest your cost savings in personal wealth creation.


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