Financial reports are crucial for all business owners, whether they are a micro, small, and medium enterprise (MSME) or not. Financial reports assist your business in making strategic business decisions, with its potential growth made by analyzing your business’s financial reports.
However, these important decisions are often overlooked by small business owners because of the misconception that creating financial reports is difficult and complicated, and that the financial reports of larger businesses are typically made by an accountant.
In general, a financial report is a collection of financial information compiled and presented to record and analyze financial data. Financial reports can be done periodically, such as daily, and then accumulated weekly, monthly, and annually.
However, there are some key metrics that must be included when creating a financial report: business cash flow, debts (if any), expenses, financial notes, and purchase records - these metrics serving as basic references when preparing your business’s financial report.
Additionally, financial reports are essential for growing your business because they contain information about your business’s financial activities that can be used for analysis and record-keeping. The more comprehensive and detailed the information that is recorded, the better the analysis is for your business’s business development.
However, if the information provided is incomplete or lacks detail, it can have serious consequences,which can lead to poor decision-making, which may then result in substantial losses or even bankruptcy.
In addition to serving as an analytical tool, financial reports provide an overview of the condition of your business. For example, if the records show a profit, the report helps to identify what positive actions can be taken to maintain that trend, or conversely, if the trend shows that there is a decline, it offers you insights into what may be done to increase profitability.
Furthermore, for those businesses funded by external parties, financial reports serve as a form of accountability, and with proper record-keeping, investors will view you as being transparent and trust-worthy.
Moreover, in addition to serving as an analytical tool, financial reports provide an overview of the condition of your business: -if the records show a profit, it helps identify what positive actions can be taken to maintain that trend. Conversely, if the trend shows a decline, a loss, it offers insights into what can be done to reverse the trend and increase profitability.
For those businesses funded by external parties, financial reports also serve as a form of accountability, as with proper record-keeping, investors will view you as being a trustworthy business owner who can be relied upon to safely administer and manage their investments.
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According to the Indonesian Institute of Accountants (IAI) in the SAK ETAP 2009, financial reports are part of the financial reporting process.
A complete set of financial reports will include the following:
Investopedia.com defines the Balance Sheet as being a ‘financial statement that presents the amount of assets, liabilities (debts), and equity (capital) of a business at a specific point in time’.
As mentioned in the definition, the Balance Sheet consists of three main components: assets, liabilities, and equity:
Assets are the resources owned by the business, which include current assets, fixed assets, and intangible assets (patents, trademarks, etc.);
Liabilities are debts, consisting of current liabilities and long-term liabilities; and
Equity represents the difference between assets and liabilities.
The Income Statement provides information about the difference between revenue and the costs or expenses incurred. The Income Statement can serve as a basis for making decisions related to investment returns and other matters.
Equity refers to the capital or wealth of a business, small and medium-sized enterprise (SME), or other entity. This Equity can be calculated by subtracting liabilities from assets. The Statement of Changes in Equity contains a report that includes all changes in Equity over a specific time period.
The Cash Flow Statement provides information about Cash Inflows and Outflows during a specified time period.
The Notes to the Financial Statements provide additional information that is needed to explain the Financial Reports, notes that can serve as supplementary data, containing descriptions, narratives, and opinions.
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Financial Reports are an essential part of a business, primarily used for analysis and evaluation to help the business’ growth and development.
However, before starting to prepare financial reports, there are certain prerequisites, such as understanding the basics of accounting and focusing on details.
It’s important to understand the fundamentals of accounting because you will encounter accounting terms and basic accounting formulas.
Focusing on details is crucial because the information recorded in precise detail will directly impact your business’s analysis and evaluation.
As aforementioned, creating financial reports requires a focus on detail to ensure that the data collected is accurate and useful for business analysis.
For novices and beginners, preparing financial reports can be time-consuming, however, with the advancement of technology, and the assistance of Youtap’s Business application, you can (now) create financial reports.
The following are some of Youtap’s Business apps features that you can access, including:
Firstly, Youtap’s Smart Analysis feature provides reports related to payment methods, and transaction history, as well as financial graphs;
Secondly, Youtap’s Product Analysis feature helps you identify your business’s top-performing products to help you further develop your business;
Thirdly, all of your business’s financial transactions are fully recorded in the transaction history; and
Lastly, price adjustments through multiple connected devices can be automatically applied to include discounts, service fees, and taxes.
Additionally, other features like cash payments, cashless payments via QR Codes that accept all types of digital wallets, and multi-device connectivity, ensure that no sales transactions are left unrecorded
By having the complete Youtap POS Online Cashier app features, your business can easily manage your financial reports as the recording is integrated and done digitally.
These financial reports are available in Youtap BOS, the app for business owners integrated with Youtap’s POS.
Download Youtap BOS now from the Google Play Store or the iOS App Store and experience the convenience of managing your business and shopping for your business’s needs with ease!
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e-mail: halo@youtap.id
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