What Is Financial Reporting?

Does it feel like your business isn’t growing? It could be because your team lacks crucial financial reporting and analysis capabilities that help track key business metrics and trends. Without the right tools to stay up-to-date on what’s happening across the business, it can be difficult to make informed decisions on how to best manage it and help it grow.

Ensuring timely and accurate financial reporting and analysis not only helps you to better understand the performance of your business, but also helps you to identify business opportunities to make the right decisions for future growth.

So, what exactly is financial reporting and why is it vital?

For listed companies, at a minimum, quarterly financial reporting and an annual financial report are required, while internal measurement is typically performed monthly. 

Key Types of Financial Reports

1. Balance Sheet:

This is a financial statement that reports on the financial position of a company including the company’s assets, liabilities, and owner’s equity at a point in time.

2. Profit and Loss Report: 

Also known as a P&L Report or Income Statement, this financial statement reports on a company’s expenses, revenue, and net loss or income over a specified period of time.

3. Cash Flow Statement:

This is a statement of a company’s cash flow activities comprising operating, investing, and financing activities. The statement typically reports on the cash generated and spent over a certain period of time.

4. Statement of Changes in Equity:

This financial statement reports on your company’s changes in retained earnings after dividends are released to stockholders and is an important aspect of financial reporting that contributes to stock price.

Importance of Financial Reporting

Financial reporting provides insight into company performance.  This information is beneficial in 2 ways; 1) compliance with regulatory requirements, and 2) internally assess performance to plan and adjust the forecast. 

Regulatory compliance is a necessity when it comes to managing your organization.  Not only do you have the financial reporting requirements mentioned above but have tight deadlines to provide reporting to regulatory agencies, debt holders, investors, and other key stakeholders. Timely financial reports provide insight for investors, creditors and other stakeholders to get an idea of your company’s creditworthiness and financial integrity. This helps them make rational decisions on lending or investing in your company.

In addition to the regulatory requirements, an organization must internally be able to assess their performance and adapt to any variances that arise quickly.  Finance and accounting organizations are held under immense pressure to provide complex financial statements quickly and accurately to their stakeholders to facilitate Management Discussion and Analysis (MD&A) and guide these decisions.   

Revamp Your Financial Reporting Through Automation

Automated financial reporting offers internal and external stakeholders of the business a clear insight to overall health and performance of your company however there is an immense amount of risk associated with it. The ability to mitigate the risk associated with the creation of financial reports from the automation of data consolidation through to financial reporting will give you peace of mind that your external stakeholders have reports that are accurate, and enable you to assist should questions arise.  Mitigated risk coupled with internal stakeholders abilities to perform ad hoc analysis on key financial analysis reports will enable your team to be proactive in the organization helping them identify opportunities and improve operations and performance of your company. Save time and costs by eliminating manual processes through FP&A automation. 

Ready to find out more about automating your reporting needs? Contact our experts today for help with adopting financial reporting software on the Planful platform.