Financial reports and statements are critical for understanding the financial health of your business. They’re also important for setting goals, making business decisions and obtaining financing/capital.
Financial reporting serves two purposes. First, it helps management with decision-making concerning the company’s objectives and strategies. The information in the reports can help management better understand the company’s strengths and weaknesses. Second, financial reporting provides information to its stakeholders including its shareholders, potential investors, financial institutions and government regulators about the financial health and activities of the company. It’s a way of demonstrating to the company’s stakeholders that the company is being run appropriately.
Effective financial management is an ongoing process that features a cycle of good management habits. The financial management cycle is completed when management use the results of the analysis from the reports produced during the year to inform their plans going forward.
A company’s financial planning should include budgets for operations and for capital. Together these comprise the budget. Creating an annual operating budget should be a familiar task for a company. However, creating a capital budget, is often overlooked or deemed unnecessary for small or midsize companies. An operating budget should demonstrate the organization’s commitment to fulfilling its mission. It is based on reliable income and expense projections as determined by all departments within the company.
ESG can help your company through the following activities:
- Preparation and/or review of financial reports (balance sheet, income statement)
- Preparation and/or support of annual budgets and interim forecasts
- Review of inventory controls
- Gross profit analysis on individual product lines and/or services