Financial reporting helps stakeholders understand where money is coming from and where it’s going so they can make smart investments and decisions. It’s a critical component of establishing trust among investors, creditors and other business partners. It also enables businesses to evaluate performance over time and manage areas that may be underperforming. And of course, it’s necessary for legal compliance, as publicly-held companies must file and publish their financial reports to meet statutory requirements.
There are three main types of financial reports: the income statement, the balance sheet and the cash flow statement. The income statement outlines revenue, expenses and net income for a fiscal period. Investors scrutinize this report to assess a company’s profitability, liquidity and growth potential. The balance sheet identifies assets, liabilities and shareholder equity for a complete picture of a company’s financial health. Lenders use it to determine a business’s creditworthiness when approving loan applications. The cash flow statement tracks cash inflows from operations and investments, as well as outflows for operating expenses, financing activities and business commitments. It also flags any reliance on outside funding or debt.
Creating meaningful and accurate financial reports can be challenging. With the right technology, however, it can be done efficiently and effectively. A robust automation solution can turn financial reporting from a frustrating administrative task to a collaborative team sport where Finance partners with the business to drive success. A tool like Fyle’s real-time credit card feeds let employees instantly submit receipts via text message, email or everyday tools like Slack, ensuring that expense data is captured accurately and submitted on time.