A Guide to Financial Reporting for Small Businesses

Financial reports tell you where your money comes from, where it goes and what the business is worth. They are how you decide what to cut, what to grow and when you can afford to hire. They are also what your accountant, your bank and your investors ask for.

Many small businesses still build these reports in spreadsheets at the end of the month. In SyncBooks they come straight from the books: every invoice, bill, payment, shipment and expense posts to the journal as it happens, so the reports are always up to date.

This guide covers the reports that matter most and how to use them.

Start with clean books

Reports are only as good as what goes into them. Three things in SyncBooks help:

• Automatic posting. Invoices, receipts, payments, shipments (with their cost of goods sold), bills and expenses post to the journal on their own. Anything that cannot post yet, for example because an account is not set, waits with its reason.
• Your accounting policy. You confirm your fiscal year, your basis (accrual or cash) and your costing method. SyncBooks never guesses them.
• Closed periods. Once a month is done, close it, and nothing can post into it by mistake.

The profit and loss statement

The profit and loss (P&L), also called the income statement, shows your income, your expenses and the profit or loss between them over a period: a month, a quarter or a year.

Use it to see whether the business is making money and which costs are growing faster than sales. In SyncBooks you can run it on an accrual or a cash basis, and split it into a column per class, location or project, so you can see which store, product line or job is profitable.

The balance sheet

The balance sheet is a snapshot on one date: what the business owns (assets), what it owes (liabilities) and what is left for the owners (equity). It always balances, because assets equal liabilities plus equity. Our post on the accounting equation explains why.

Use it to check how much cash you have, what customers owe you, what you owe suppliers and lenders, and what your stock is worth.

The statement of cash flows

A business can be profitable on paper and still run out of cash. The statement of cash flows shows how cash moved during a period, split into operating, investing and financing activities. SyncBooks builds it by the indirect method and checks it against your cash and bank accounts.

For the weeks ahead, the cash flow forecast looks 30, 60 or 90 days out from today’s bank balances, open invoices and bills, recurring invoices and bills and, if you choose, a budget.

Receivables and payables

The A/R ageing report lists unpaid invoices by how many days they are overdue, and the A/P ageing report does the same for your bills. Both tie to the ledger. Use them every week to chase payments and plan what to pay.

The detail behind the totals

• Trial balance. Every account’s balance on one date. It is the first thing an accountant checks.
• General ledger. Every posted line by account for a period, with the balance before and after, and a link to the document behind each line.
• Transaction list. Every entry in a period, filtered by account, customer, supplier or type.

Custom reports and budgets

When the standard reports don’t answer your question, build your own. Choose the accounts, the columns (periods, classes, locations or budget) and the filters, then save the report for yourself or share it with your workspace.

Tag income and expenses by class (a department or product line) or by location (a store or region), and set a budget per account and month. The budget against actual report shows how you are doing by month, quarter or year.

Reports you can trust

Each report in SyncBooks says whether anything is still waiting to post. If a bill is missing an account or an order is missing a tax rate, you see it, so partial numbers are never shown as final.

Export and share

Every report downloads as a CSV file, which opens in Excel or Google Sheets, or as a PDF. Your accountant can also join your workspace as a collaborator, free and without using a seat, and run the reports themselves.

If you run more than one company

The group report combines the figures of a group of companies and eliminates the balances between them, giving you a management view of the group as a whole. The intercompany report shows what each of your companies owes the others.

A simple monthly routine

1. Reconcile each bank account against its statement.
2. Check the reports for anything still waiting to post, and fix it.
3. Read the profit and loss and the balance sheet, compared with last month.
4. Check A/R ageing and follow up on late invoices.
5. Close the month.

Do it every month and you will always know where the business stands.