5 Important Accounting Reports For Any Business

Published: 11/28/2022
Author: Michelle Lajoie
Accounts Payable

When it comes to small business accounting, most people know that it is important to keep your records updated for taxes. However, there are many more benefits from business accounting that you can use to grow, improve, and expand your business. Here are some of the most important accounting reports for your business that you should know about.

Profit And Loss Statement/Income Statement

The most important report for any business is the profit and loss statement, also called a P&L or income statement. This report tells you how much money a business makes, as well as a lot more. A well-run bookkeeping operation includes details for where you spend and where your money comes from. For example, I can look at my P&L for a quick summary of how much I make from writing, how much I make from advertising, how much I spend on business travel, and how much I pay for computer and internet costs. Each business would have different accounts for its own income and spending categories.

Small business owners should look at this report at least monthly. It is also a good idea to look at trends, comparing current results to the same period in the prior year and comparing the most recent month with the last few months. This should tell you what’s working well and what isn't, as well as help you focus on the most profitable parts of the business.

Balance Sheet

A balance sheet gives you a snapshot of what a business has and owes at any given time. For businesses, assets typically include things like bank account balancing, accounts receivables, and possibly an investment account. A balance sheet may also include assets like property, computers, equipment, and other saleable physical and intangible property. Liabilities generally include things like credit cards, business loans, and anything else your business owes.

The accounting equation is based on the balance sheet. It tells us that assets plus liabilities equals equity. The difference in what you have and what you owe should ideally be a positive number and one that grows over time. When examining the balance sheet, also look at the short-term assets versus short-term liabilities. If you have payments owed soon, you won’t want to run out of cash without noticing that your assets are illiquid.

Accounts Receivable Aging

You don’t work for free, and your business isn’t a charity. Doing the work and sending the invoice is just part of the battle. You must also be sure those payments get paid and collected. Your accounts receivable (A/R) aging report tells you how well you are doing on the collections side. Look out for customers who are perpetually late, usually pay on time, and recently started paying late, and growing late balances from any customer.

I’ve been very lucky when it comes to collections, but part of that is choosing the right clients to work with. Upstanding companies like Due always pay quickly. Some less stable, less trustworthy, or financially strained companies are more likely to pay late or stiff you when it comes time to pay the bill.

Revenue By Customer

Just as you should be looking at who owes you money, you should be looking at who gives you the most of it. Your revenue by customer report tells you how much you made from each customer over a period of time. Freelancers and professional service businesses rely heavily on repeat business in many industries. Building good relationships with quality clients can turn in to a lucrative, reliable, and healthy income stream.

However, beware of putting too much faith in any one income source. If too much revenue comes from one source, that is called “revenue concentration risk.” If one client leaving would ruin your entire business, you need to get more diverse in who your business serves. Putting too many eggs in one basket might just bankrupt your company.

Accounts Payable Aging

You probably wouldn’t like it if a company took too long to pay you. Do your vendors a favor and pay them on time as well. Your A/P aging report tells you who you owe and how much. As long as your books are updated, you can easily look and find who you need to pay so you don’t miss the due dates.

Paying late can sour relationships and may lead to late fees and other costs. Just pay on time. You might even get an early payment discount from some vendors. That’s a big win-win!

Source: https://www.irs.gov/newsroom/small-business-advertising-and-marketing-costs-may-be-tax-deductible 

Are You Looking For A Partner To Take Your Sales Team To The Next Level?

Interested in learning more about closing high-dollar cases? Attend The Closing Institute to learn how to predictably scale implant production, by implementing advanced marketing and sales strategies from the leading experts in the industry! With courses in Clearwater, FL and Las Vegas, NV, this isn’t just theory. This is a tried and true method to grow your full arch production and develop your team to strategically and consistently close high-revenue, dental implant procedures.

Start dominating your market by getting Progressive Dental Marketing's award-winning services and continuing education seminars to exceed your dental practice goals now! Progressive Dental Marketing can be reached by calling (727) 286-6211 or by visiting progressivedentalmarketing.com. Feel free to explore our website and the several case studies we have!

If you are interested in hearing more from Bart Knellinger, come to one of our upcoming dental continuing education courses. Visit theclosinginstitute.com today to reserve a spot for you and your team!

Progressive Dental is more than just a marketing company, we are a company dedicated to dental practice growth in Clearwater, FL. Our team was founded on creativity, collaboration, and hard work. We are constantly evolving and are passionate about providing the best suite of dental marketing services for our clients. They are the reason we love what we do!