Numbers in any business industry replicate the story of the business growth, trends, profitability, challenges, and high points. Underestimating your finances will no more fascinate new investors and stakeholders, which eventually result in financial losses and draw the attention of regulatory bodies.
However, every business is aware that their financial reporting is not as accurate as it should be. But they don’t take it seriously or take slow action as they have other priorities. Numerous studies have shown that nine out of ten startups or small businesses fail due to poor financial reporting practice. Don’t become another business statistic!
If you haven’t taken any step for improving your reporting, don’t worry. We’ve outlined some simple steps that would help you enhance your financial reporting, whilst allow you to focus on your other priorities as well:
1. Move everything in the cloud
Many businesses often use spreadsheets to generate financial reports as it is quite affordable and easy-to-use. But, it can be a real headache as using spreadsheets leads to inaccuracies because assembling information from so many sources and putting together everything in an appropriate format eventually becomes puzzling.
Besides all this, your staff integrates the data manually and performs tasks like reconciliation, creating and checking formulas, updating charts, and generating reports in a set format efficiently consumes a lot of time and demands accuracy.
Use cloud computing to ease the life of your staff and maintain efficiency in your business. Put all the financial data in the cloud and make it accessible to your team members. Cloud is flexible, quite easy and absolutely free if you utilize tools like Google Drive and Dropbox.
However, if your storage is already full, you can go for paid version to extend the storage of these two cloud platforms. Information in the cloud is easily accessible and shareable across the teams and employees can concurrently work on the same file from different locations as well.
2. Let your employees do self-service
As your business grows, it is apparent that you will expand your team and accordingly you will require more systems, which will generate more data. Financial reporting that earlier took a few days is all of a sudden taking weeks and months.
Earlier, you had two business analysts, and now it has turned to four. Which factors contribute to this obstacle? Well, multiple systems that are not integrated appropriately and triggering redundancy because of various users in the firm performing the same data-assembling tasks that ultimately leads to delay in report generation.
Set your business free from countless users with self-service, so they can get all the required reports on their own and don’t have to rely on others. Maintain transparency within departments to boost the productivity of the teams, as it clears to employees their responsibility and inspires them to work more vigilantly.
3. Handle inflation tactically and simplify financial reports
Inflation effect financial statement rigorously and many companies across the globe confront this problem. Accounting researchers are doing core research on several models of inflation accounting for the past few years. But they failed to develop a single inflation accounting model, which could get global recognition.
More so, organizations make the financial report very complicated by using more numbers and content rather than facts.
Management should devise their own inflation model and adhere to it whenever inflation occurs. More so, each financial report should be integrated with the viable information concerning the effects of inflation on financial statements.
Businesses should use graphs, diagrams and tables to classify numbers accordingly to eliminate the hassle of analyzing financial statements.
4. Stay informed on cash flow data and make use of accounting ratios
Either it’s an investor or creditor, everyone prefers cash flow data that shows up net profit earned by your entity throughout the year. Investors are not only interested in earning dividends but also in the payments of dividends.
But many businesses find cash flow management quite challenging just because of other priorities. One should also know different accounting ratios along with principal ratio to calculate and analyze the liquidity, solvency, and profitability of the entire business.
Enterprises have to keep a hawk eye on incoming and outgoing cash. Manage invoice processing and invoicing simultaneously to avoid bad debts. For ration analysis, companies should adopt the Ratio Analysis tool that can provide in-depth financial reporting, which eventually enhances the financial analysis of the firm.
5. Work together in harmony
Financial reporting relates to each department in your organization, whether they generate income or not, but at some point, they all are associated with cost. To plan effective strategies you will have to combine all the reports and analyze everything with appropriate planning and forecasting to see the past, present, and future of the company with zero blurs.
The financial manager should connect the dotted lines with to make them team understand on how to manage these opaque. Rather than generating data on a regular basis, let everyone come on the same page with same KPIs, calculations, metrics, data, and reports.
6. Seek external assistance to stay focused on what matters
Managing everything in-house may deviate your focus from core activities like implementing growth strategies, changing policies, controlling expenses, managing employees, etc. Being a business owner, you have so many aspects in your plate! Financial management is an important task that may eat up your time and resources; however, in-house hiring is quite expensive.
Seeking external help is an ideal way to stay on top of your accounting aspects. Today, outsourcing accounting services have become a popular trend that enables businesses to focus on their core activities by providing owners with accurate reports on time. They have highly experienced accountants, who hold great experience in serving different business domain.
They not only generate financial reports but also advise you on financial aspects to enhance your decision-making process.
Try to make your financial reporting seamless by embracing any of the above tactics because financial reports replicate the position of your business in the market, don’t ever overlook this aspect. Take the first step towards improvement today!
Author Bio: Tracy Watson is a business development manager at Accounting To Taxes – a well-known company offering complete finance and accounting services. She has always been a great contributor to the accounting industry and also responsible for branding and lead generation. And being a passionate writer as well she helps businesses with her informative articles.