The Small Business Monthly Financial Reporting Package

Managing your company's accounting can be intimidating. As an owner, you desire to focus your time on growing your business, not on your books. Yet, at the Giersch Group we find that timely accurate financial information is the foundation for excellent business management.

A monthly financial report allows management to make timely decisions regarding the business; quarterly or year-end statements do not allow management to correct the course quickly enough during the year.

This resource outlines the ideal monthly reporting package for the average small business owner to use.

What's in a monthly financial report?

The three fundamental financial statements that every private company should utilize on a monthly basis are:

1. Income Statement
2. Balance Sheet (Beginning and Ending)
3. Cash Flow Statement.

The Owner’s Equity Statement, showing changes in shareholders’ interests over time, is not necessary for a private company. For a deeper understanding of financial statements and how they work together to reflect business operations, you can explore more free management accounting articles or contact us to request a free 30-minute consultation about our bookkeeping and reporting services.

Income Statement

For the Income Statement (IS), it is useful to review the current month against Budget, Prior Month Actual, and Prior Year Actual. These reports give a full perspective of the current business activity. Reviewing the IS against budget allows us to see how we are comparing to what was anticipated, and to make immediate decisions to change or improve financial results going forward. Comparing the IS to the prior month, we see the trend of current circumstances. For example, is business up or down from the prior month. Comparing the prior year, we see the current month against the same time period. This is particularly useful in businesses. If July is always a slow month, and revenues are still up from the prior year, even if they are down from the prior month, we recognize that the business is doing well. It is also useful to look at the prior 12 months trend to get a larger perspective.

Within the IS it is useful to have each line item as a percentage of sales. This helps to monitor whether items are increasing order overall compared to sales. For example, if sales are decreasing the expenses, particularly Cost of Goods Sold (COGS) should be decreasing as well. Of particular importance is monitoring the following percentages: COGS, Gross Margin, Total Expenses, and Net Profit.

Balance Sheet

In order to reconcile the validity of the Statements, a Beginning and Ending Balance Sheet must be produced. It is useful if these Balance Sheets can be on the same page to allow easy comparison. The inclusion of notes is also important. Of note should be that the cash was reconciled to the bank statement on a particular date.

Cash Flow Statement

Although the Cash Flow Statement is not utilized by many small businesses, it is critical to tying together the Balance Sheets and Income Statement. This statement reflects what has taken place between the Beginning and Ending Balance Sheets. And since cash is king, it shows us exactly how much cash is available.

Ratios

While your industry may have some specific ratios to watch carefully on a monthly basis, there are several key ratios that we recommend monitoring. Creating a dashboard that displays key ratios from your financial statements on a daily or weekly basis allows instant monitoring of the business. 

Attached to this document is a sample monthly financial report package which includes the following:

1. Profit and Loss Statement – Actual vs. Budget for Current Period
2. Profit and Loss Statement – Current Period vs. Prior Period, Prior Year Period, YTD, and as a percentage of sales.
3. Balance Sheet – Beginning and Ending of Period
4. Cash Flow Statement – Current Period
5. Accounts Receivable Aging Summary
6. Accounts Payable Aging Summary
7. Income & Expense Graph

Please note that this sample company, Rock Castle Construction, has a fiscal year that begins October 1.

Sample Monthly Financial Report:

 Small Business Bookkeeping Services in Milwaukee, Madison & Brookfield

The primary function of our bookkeeping service is to provide a monthly, quarterly and annual reporting package in full accrual accounting. We can get you set up with online accounting software (or clean up your books if you already have accounting software) and most importantly teach you how to use your monthly reports to make strategic decisions and grow your business.

We work with Wisconsin small business owners all the time. They can afford our services, and so you can you - pay only for the help you need.

To get started, just call or contact us online to request a free 30-minute consultation. Get a free balance sheet analysis, learn more about our services and get answers to your questions about small business financial reporting.

Contact the Giersch Group online today to foster success by the numbers.