How often should the reports be generated?
Business entities usually prepare most accounting reports once a year, that is, at the end of the financial year, of the country in which the company is incorporated. They can also be prepared two times a year to assess that entity’s performance. An account Receivable Age analysis, also called the Debtors Book, is generated in categories for current, 30 days, 60 days, 90 days, and longer. The borrower is free to pay before the due date; hence the receivable summary can be revised or generated at any time. For accounts, the payable aging report categorizes payables and suppliers based on time buckets. The information is typically set up with 30-day time buckets so that each successive column lists supplier invoices.
Who should receive the reports
The recipient of these reports benefits them with information for decision-making purposes, while others will measure profitability and performance. The recipient of the pieces includes business owners, lenders, suppliers, and government agencies.
- Most interested users of all the financial reports such as balance sheets, since they enjoy an interest in profits and want to reveal assets they own and liabilities of the company at any given time.
- Lenders are interested in both company’s profit and cash flow since they want to keep track of their loans.
- They use an aged account payable reports as a management tool to monitor the age of the outstanding payables allowing early action to be taken to ensure fair trade credit terms.
How can the information on the reports help with the overall management of the company?
Financial reports give more than just a snapshot of business health, a powerful management tool to affect your organization’s positive change. Example of accounts and their benefit to management include:
- Balance sheet. The report is an essential directional guide to managing your business’s health, as it will indicate exactly how much your company owns and owes to others.
- Aged payable report is used as a management tool to monitor the outstanding from suppliers and vendors invoices, allowing early action to ensure fair trade credit terms.
- Aged receivable report is used by management to determine the allowance for doubtful accounts.
Which other reports would be useful to generate regularly
- Income statement reports. Shows the revenue a business earned over a certain period and its profitability amount .business use the information to detect over budget and under budget.
- Cash flow statement. Details a business’s cash flows during specific periods and indicates if a company made a profit or a loss. Also crucial for analyzing liquidity and long term solvency of company’.
- Statement of shareholders’ Equity. They generated at the end of the accounting period to give the investors information about its equity position and sentiment. The report allows the shareholder to see how their investment is doing and helps management decide the future of stock shares.
REFERENCES
Song, Y., Wang, H., & Zhu, M. (2018). A sustainable strategy for corporate governance based on the sentiment analysis of financial reports with CSR. Financial Innovation, 4(1), 2.
Fatihudin, D., & Mochklas, M. (2018). How Measuring Financial Performance. International Journal of Civil Engineering and Technology (IJCIET), 6(9), 553-557.
Kausar, A., & Lennox, C. (2017). Balance sheet conservatism and audit reporting conservatism. Journal of Business Finance & Accounting, 44(7-8), 897-924.