When it comes to running a business it is important that you have a clear understanding of the financial position that your business is in. Not only does this allow you to plan for any growth opportunities that you have but it will also help to identify any trends in your income and expenditure. Working with a Gloucester accountants such as https://www.randall-payne.co.uk/services/accountancy/gloucester-accountants/ will enable you to have a higher understanding of what is going on with your business financials at key points throughout the year.
Here are some of the key financials that you will want to have an oversight of:
The balance sheet is essentially the statement of the financial position that your business is in on the dates that you run the report. It gives you an overview of the assets and liabilities in the business as well as the net worth. The assets will be an accumulation of all the items that are owned by the business and can include buildings, vehicles, computer equipment as well as any stock, equipment items and of course the cash that is held in the bank. The liabilities will be accumulation of any debts, overdrafts, business loans, employee entitlements and other amounts that would normally slot into this category in your finances.
Profit and Loss
This is a record of the revenue and the expenses of the business, shown for a given time period. This could be for a financial year or even on a quarterly basis. The report will show whether the business has turned a profit or a loss in the time period that you input for the report. A good overview of the profit and loss can also help you as a business to identify if there are any areas where you could look to make increased revenue or where you might want to look at cutting some costs. It is a document that stakeholders within businesses are particularly interested in.
Cash flow statements give you an indication of the cash position that the business is in at the point of running the report. It will give you an idea of what money is due to come into the business and what bills and expenses need to be paid out. The statement gives you an idea of where your money is going and it will help you to identify what you are paying to any lenders or the increasing costs of the stock or products that you sell or manufacture.
Budget and Forecasting
Budgets and forecasting allow you to project what income and expenditure you have coming in the future. This is often based on the historical information that you have on the growth and expenses within the company.