Fin Fit Tip: 3 Reports All Business Owners Should Review Monthly

Denise Wong August 4, 2021
financial plan

What are the top 3 reports every business owner should review every month?

In my many years of working with business owners, and as a business owner myself, we tend to put a lot of emphasis on entering and recording transactions, or bookkeeping.

We want to keep on top of the day-to-day to tame the paper and transactional clutter, but we don’t put the same level of intensity on analyzing what the recorded transactions mean. Consistent bookkeeping is crucial in providing quality data on which to make financial decisions.

So, what are the top three reports every business owner should review at least every month?

1. Cashflow Analysis

Cash is King.

We strive to have more cash inflows than cash outflows or positive cashflow. This means the amount of cash we pay for expenses should be less than sales cash inflows.

In businesses where sales receipts do not always happen at the time of the sale, or when payments do not happen at the same time of the expense, timing becomes a variable we need to keep in mind.

Bonus Reports!

If your bookkeeper, accountant, or accounting software allows, you can also ask to review aged accounts receivable and aged accounts payable to analyze cashflow timing.

(We go into detail on how to manage cashflows in our WEC Week 1 Financial Fitness Webinar Series and show how to build a cashflow analysis.)

2. Income Statement

An income statement is a very typical report any accounting software, your bookkeeper or accountant can generate very easily after all the bookkeeping has been recorded.

The income statement, sometimes called a Profit & Loss statement, can be seen as a report card for the business because it shows the sales and the expenses of the business that happened in a specific period.

The income statement can be done over the same period of times like a cashflow analysis which are typically monthly, quarterly, and annually.

3. Budget vs. Actual

This third report will require you to have a budget to start.

Your business budget can be done on an annual basis and then divided by 12 or 4 to get monthly budgets or a quarterly budget.

The budget is a great way to set expectations about what you expect your business to do from a revenue and expenses perspective or cashflow perspective.

By comparing your budget expectations and the actual results, you can analyze how your business is faring and course correct as required. Many business owners still do this in their heads, on a back of a napkin or in Excel.

With the advancement of accounting software and tools, many accounting programs can report budget vs. actuals quite easily.

Heard of The Pareto principle or 80/20 rule?

Where Finance is concerned, many business owners spend 80% of their time on recording and creating financial transactions and are only left with 20% of time and resources to analyze the implications of the financial data created in the reports above.

Accounting professionals, software and integration applications can help business owners flip the principle, so that 20% of efforts are used to bookkeep and 80% of time and resources can be used to analyze and make financial decisions that can impact your business favourably.

About Denise Wong

Denise C. Wong is the Principal and CEO of D-Squared Consulting a Burnaby-based consulting firm that teaches clients how to “Grow Beyond the Numbers”. Denise and her team help organizations find efficiencies in Finance & Accounting by undertaking projects that entail the review of business processes, culture and systems. Because she is a natural facilitator and change agent, Denise can help business leaders achieve more than they envisioned. Denise’s experience covers a wide range of industries, including hospitality, real estate, technology, mining and forestry. Denise enjoys working in fast-paced and high-pressure environments undergoing growth and change and working on complex business challenges. Denise holds a CPA, CA designation and can be found on the tennis court or playing board games outside of work.

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