What Is Financial Reporting?

In business the communication of financial information is really important and can be detrimental to any organization if not done properly. Financial reporting is the communication of financial information throughout a business which makes it easier for the business owners and managers to make better financial decisions on credit, investments, operations, productivity, performance management, etc.

It is also used to provide up to date financial information on what is going on in the business. So as managers and business owners you have to ensure that you communicate the financial information of your organization timely and properly.

 

financial reporting system report
What is financial reporting?

 

Financial reporting includes financial statements such as balance sheets, equity reports, cash flow information, income statements, etc. In addition financial reporting also involves creating ad hoc reports based on the current business needs and strategy. This is where management dashboard play important rols in management reporting of financial KPIs, ratios and metrics.

Business Management Software


All this information will give managers a proper perspective of how to structure the financials of their company, whether to put more money into marketing, raise more cash from investors or banks, set proper financial goals for next year or the next quarter etc. you have to also ensure that you communicate the information that’s on the financial reports within your company properly, so that everyone know what’s going on and are heading in the right direction. Other Items that’s included in financial reports are auditor’s report, conference calls and S.E.C filings.

Financial reporting is a very essential part of any business and the financial information can be typically used as a metric to measure how well the business is doing and how the money is being spent and made.

 

Financial statements and reports
Financial statements reporting

 

Just imagine a company that doesn’t have a well-planned out financial report system in place. Things can get pretty chaotic especially if it’s a public traded company where investors are always scouring through different company’s data to ensure that it looks like a healthy company to invest in. Always ensure that your financial reports abide to various regulations that are in the S.E.C(Securities Exchange Commission) and I.A.S.B(International Accounting Standards Board) laws. You need to keep up to date of what’s going with the regulations because they do change occasionally and your company will be under scrutiny if it’s adapted to change. There have been a lot of cases over the years where companies never comply with the laws and commit fraud to hide their real financial details which were pretty horrible to make their company look good in the eyes of investors; these laws helps to keep things in order.

 

Financial reporting ratios
Financial reporting using financial ratios

 

If we should look at financial reports more broadly, we all use it in our day to day lives; although it’s mainly used in businesses. We all get financial reports because when we purchase something from the supermarket we get a receipt with financial information on it about our purchase and that can alter our buying decisions. We also receive bills which also consist of financial information so as you can see financial is not only used within businesses.

 

Financial dashboards
Financial dashboard reporting

 

To put everything in retrospect, financial reports are used in every business to communicate important financial information both internally throughout the business and externally to both investors and regulators. It helps you to keep up to date on what’s going on financially within your business and helps you to make important business decisions.

 

Financial business plan