I believe that on a weekly or monthly basis every bookkeeper, business manager, or business owner should print and analyze the following crucial 10 financial reports:
- Balance Sheet Summary. With this report, you can get an accurate “snapshot” of the business financial position as of that day. This report needs to be read in combination with P&L, I do not recommend reading these two reports independently, always in conjunction. Analyses these accounts:
– Accounts Receivables: are this increasing in proportion to sales? can you sustain paying for variable costs if clients do not pay you?
– Accounts Payable: are these decreasing or increasing? are you at a cash flow risk of not paying your vendors suppliers? if so, how can this affect your operation?
– Bank/Cash: Do these accounts match the bank balance? are they reconciled?
- Profit & Loss Summary for the entire month or week: This reports provides the most basic information about the operating/financial health of the company. With this report you should compare your sales to your Cost of Goods Sold (direct variable costs) and Expenses (fixed and variable indirect costs). Analysis of the “overhead” involves paying close attention to the fixed office costs that are necessary to maintain the business open, consequently the gross income from your sales activities needs to at the very least cover your overhead to survive. Additionally i recommend to do a trends/growth analysis by comparing the P&L to the last month or same month last year.
- A/R Aging Summary & A/P Aging Summary: Keep in mind that generally the older the invoices get, the lower probability of collection. Make sure you understand your client’s credit and financial position before you sell more or perform additional services with aging invoices!
- Outstanding Checks Report (Missing Checks Report): Make sure there are no outstanding checks that have somehow been duplicated or voided
- Sales by Customer Summary. Have a clear understanding of where your business is coming from. also make sure your group your clients by Job to have a accurate assessment of a “global client”
- Expenses by Vendor Summary. Understand where your are spending the money! Identify which vendors/expenses are not necessary. to reduce costs.
- Sales by Rep Summary. This is good to plan for commission to salespeople and to reward your top producers.
- Pending Sales & Open Sales Orders by Customer. These reports are great to understand which pending or potential sales are open based on sales that have not been invoiced or completed as of that day.
- Open Purchase Orders. These reports are great to understand which pending inventory items have yet to arrive.
- Open Sales Orders: makes sure your customer is not waiting too long for their product or they will cancel or go somewhere else.
Many bookkeepers that come to our QuickBooks Training Courses agree, that doing the work year-round, especially running reports at least weekly to correct and avoid mistakes is the most efficient way to keep a good set of books.
Hector Garcia, CPA
QuickBooks ProAdvisor & Registered Tax Return Preparer