Health is wealth. And this is literally true in business! How is your financial health? What do your financial statements say?
Financial statements are formal reports that summarize your company’s financial position and performance. They are typically prepared at regular intervals: monthly, quarterly, or annually. They are used by a variety of stakeholders, including shareholders, creditors, and management, to assess the financial health of your company.
There are three main types of financial statements: the income statement, the cash flow statement, and the balance sheet.
The income statement, also known as the profit and loss statement, shows your company’s revenue, expenses, and net income (profit or loss) over a specific period of time, such as a month, a quarter, or a year. It provides information about your company’s performance and helps stakeholders understand whether your company is generating enough revenue to cover its expenses and to make a profit.
For example, if you see that your business has high expenses and low revenues, you may need to take steps to reduce expenses or increase revenue in order to improve your profitability. On the other hand, if you see that your business is generating significant profits, you may want to consider investing in new opportunities or saving the excess cash for future needs.
The cash flow statement shows how much cash your company is generating and using over a specific period of time. It helps stakeholders understand your company’s liquidity and its ability to meet its short-term and long-term financial obligations.
For example, if you see that your business is using more cash than it is generating, you may need to take steps to increase cash inflow or reduce cash outflow in order to improve your business’s financial stability. On the other hand, if you see that your business has a healthy cash balance, you may feel more comfortable investing in new opportunities or saving the excess cash for future needs.
The balance sheet is a snapshot of your company’s financial position at a specific point in time. It shows your company’s assets, liabilities, and equity. Assets are resources that your company owns and expects to benefit from in the future including real estate and machineries among others. Liabilities are obligations that your company owes to others. Equity represents the residual interest in the assets of your company after liabilities have been settled.
For example, if you see that your business has a lot of debt and few assets, you may want to take steps to pay off the debt or increase your business’s assets in order to improve its financial stability. On the other hand, if you see that your business has a lot of assets and low debt, you may feel more comfortable taking on additional debt or investing in new opportunities.
By reviewing financial statements, stakeholders can get a better understanding of your company’s financial performance and make informed decisions about whether to invest in, lend to, or do business with your company. For you and your management, financial statements can provide valuable insights into your company’s financial health and help you identify areas where improvements can be made to increase profitability and strengthen your company’s financial position.
Now, throw on top of the many benefits of using cloud accounting financial statements. Cloud accounting is the use of online software to manage financial transactions and create financial statements. These systems allow you to access and update your financial information from anywhere with an internet connection, making it easier to manage your business finances remotely.
Cloud accounting financial statements can help you manage your business in a number of ways.
- Real-time access
One of the main benefits of cloud accounting is that it allows you to access your financial statements anytime, anywhere with an internet connection. This means you don’t have to be in the office to stay up-to-date with the financial health of your business. For example, if you are out of town and need to review your financial statements before a meeting, you can do so from your smartphone or laptop. This real-time access to financial information can help you make informed decisions on the go and stay on top of your business.
- Automated updates
Cloud accounting systems automatically update your financial statements as transactions are entered into the system. This eliminates the need for manual data entry and reduces the risk of errors in your financial statements. In traditional accounting systems, you would have to manually enter each transaction into your financial statements, which can be time-consuming and prone to errors. With cloud accounting, you can save time and reduce the risk of errors by relying on the system to update your financial statements automatically.
- Collaboration
Many cloud accounting systems allow multiple users to access and update financial statements simultaneously. This can be especially useful if you have a team working on different aspects of your business and need to collaborate on financial decisions. For example, if you have a sales team that is responsible for entering customer invoices into the system, they can do so in real-time, and the financial statements will automatically update to reflect the new transactions. This collaborative approach can help you make better-informed decisions as a team and ensure that everyone is on the same page when it comes to the financial health of your business.
- Ease of use
Cloud accounting systems are generally user-friendly and easy to use, making it simple for you to understand and analyze your financial statements. Many systems offer intuitive interfaces and a range of helpful features, such as the ability to create custom reports and analyze financial data. This can help you quickly understand the financial performance of your business and identify areas for improvement.
- Customization
Many cloud accounting systems allow you to customize financial statements to meet your specific needs. You can create custom reports and analysis to help you better understand the financial health of your business. For example, you might want to create a report that breaks down your sales by product or customer. Or you might want to compare your current financial performance to previous periods to identify trends and patterns. Customization options like these can help you get a deeper understanding of your business and make more informed decisions.
Overall, cloud accounting financial statements can help you manage your business by providing real-time access to accurate and up-to-date financial information. This can help you make informed decisions, track the performance of your business, and identify areas for improvement. Financial health is wealth, indeed! And easyFS is exactly that: a cloud accounting software that can generate your financial statements anytime, anywhere. And it is BIR CAS-ready, too!
Book your free demo now: https://human-incubator.com/easyfs/
