Financial reporting is essential to a business for future funding and for the company’s current leadership. Knowing the financial state of a business bolsters the confidence of outside lenders. And leadership within the business can make decisions using the most up-to-date information.
So, what do new business owners need to know about financial reporting to make it a cornerstone of their companies? This article highlights three important factors to effective financial reporting.
1. Create the expectation of digital collaboration.
Gone are the days of spreadsheets being saved to someone’s desktop. (Or, they should be gone.) Nowadays, accounting software allows for multi-users with secure and leveled access. Team members see and edit only the data they are privy to.
By relying on current software, colleagues can report information in real-time, making reports more accurate. A companywide expectation of digital collaboration makes financial reporting and the rendering of financial statements a matter of a few clicks.
If you’re not sure which accounting software to choose for your new business, click or tap here to read about QuickBooks and FreshBooks. Both are great places for starting to encourage real-time entries and team collaboration.
2. Reconcile transactions on a consistent basis.
Reconciling numbers on a weekly or monthly basis is a huge time saver and ensures accurate reporting. Using a digital tool, such as QuickBooks, FreshBooks, or something similar, encourages team members to input data in real-time.
Furthermore, checking the general ledger to subsidiary ledgers (and vice versa) weekly means less time at the end of the month. Just as monthly reconciliation equates to less time and more accurate reporting at the end of the fiscal and tax year.
Setting expectations from the start for weekly and monthly reconciliations is important. Scheduling on companywide calendars further ensures it happening consistently.
2. Get expert advice.
The old adage – you don’t know what you don’t know – is true. That’s why seeking advice from an accounting firm like ours is an important step from the start. Experienced accountants and finance consultants can help you set procedures to ensure your financial reporting informs you (the leader) and possible lenders.
With effective procedures in place, you’ll save time and money in the long run. Plus, taxes are less stressful.
Morgan & Associates Can Help with Financial Reporting
We work with a wide range of clients – from businesses 30 years old to ones just 30 days old. We know about financial reporting and the importance it plays in a company aiming for longevity. Reach out if you have questions. We’d be glad to help.