Financial Reporting: Why Detailed Reporting is Key to Business Success
Financial management is already complicated if you don’t have a degree in accounting or haven’t worked in the field for many years. How can you be sure that your business is on the right track? The best way to get a detailed overview of your business is to have accurate financial reporting. Having detailed financial reporting allows you to see where your business is succeeding and sheds light on what areas may need to be improved upon. The question now becomes are your financial reports truly showing you a clear picture of your business? Or is it still a bit fuzzy?
If you are using the generic reports from your accounting software, then your reports are probably not giving you as clear of a picture as you may think. To show you what we mean, we will use the example of the FRANK Flamingo Boutique (a fictional company). In our scenario, FRANK Flamingo Boutique is a local boutique that sells clothing, jewelry, specialty gifts and also works as a floral shop. Using the basic financial reporting with their accounting software, they are getting the following report.
Looking at this report, it is easy to see the gross profit for the business. It looks like FRANK Flamingo Boutique is doing well based on the net income! They are making a profit and have enough to keep the business running. But it is difficult to tell how they are performing in each individual area of the business. That is what a professional accountant can do for you. They can create a more detailed report to show you the individual areas of the business, as well as the overall well-being. When you outsource your accounting to a professional firm, you get a report like this instead.
These reports are not only easier to read, but show a much more detailed picture of how FRANK Flamingo Boutique is doing. Immediately, the areas that are very successful for the business stand out, while still seeing the overall picture. It is easy to identify that that the clothing and floral part of the business have the highest profit margin and that jewelry profit is in the negative. Using this more detailed report, the owners of FRANK Flaming Boutique can invest more time and resources in the clothing and floral part of the business and maybe spend less on the jewelry portion. If the floral part of the business continues to grow, they may decide to start a floral only business. But, they can only really judge that by using the more detailed reporting given by their accounting firm.
It can be all too easy to get overwhelmed by financial management and reporting. For some, the best response is to simply just move on with their day. Here at Devine Consulting, we completely understand that feeling. That is why we are here to help. When you work with us, we make sure that you have all the information needed to really analyze your business. Are you ready to take the next step in your business? Call us today at 281-545-4000 and speak to one of our professional accountants.