Know Your Numbers: 7 Must-Have Financial Reports to Grow Profits

Financial reports

There are no two ways about it financial reports are necessary to growing your business and improving profits.

The idea of having to run reports may have you wanting to scream a four-letter word, but we’ll make it easy as one-two-three. Actually, we’ll be going up to seven in this article, but you get the idea.

Starting a business is always risky, and success is never a guarantee. Grab a drink with a fellow entrepreneur, and nine times out of ten, they’ll have plenty of war stories to share with you. There isn’t a one-size-fits-all approach to running a business, but there are several financial reports you can use to take your business to the next level.

Reports give you a top-level overview of the growth and development of your business financials. It’s easy to get caught up in the hustle, but everyday situations can elevate into a major crisis on a flip of a dime. For example, your business might be bringing in profitable margins, but if your customers or clients are unable to pay on time, you may find yourself in a cash crunch. By running reports ahead of time, you’ll gain valuable perspectives that will save you from going six feet under.


Nothing is more important than setting yourself up for success, and we are here for that. Get things going by implementing the right systems, policies, and procedures. Methodologies may vary, depending on your business and industry—curators of cookies may need a different strategy than curators of computer programs. However, the point is to get your business ready to run those monthly financial reports. Whether you’re working with a finance professional or running the numbers on your own, make sure you are tracking profitability according to project or class (as often referred to in many reporting systems).

Got a new candle for the holiday season? Light that up in your reporting. Redesigning your neighbor’s kale garden? Plant that in the books. Prepping a Mexican dish for your new menu? Let’s taco ‘bout it. Organizing the projects or products you’re working on will allow you to see profits and losses accordingly. Be as thorough and comprehensive as possible, including invoices, budgets, overhead expenses, etc.

Now that you’re ready to go, it’s time to zero in on your monthly reports. Compare them to previous months to make sure they’re consistent—both in overhead and profitability. If things don’t quite add up, go back and rerun the numbers. Perhaps you’ve forgotten to log in a vendor’s refund, or a payment finally came through for your world-renowned haircut-and-color combo.

Let’s put two and two together, shall we? Running reports will help set you up for success. They will help you determine if you’re off the mark in revenue because of a slump in sales or if you’ve spent more than you budgeted for. Regularly checking the amount of cash you have on-hand can help save you from catastrophe, like when your laptop decides to bungee jump off your desk. Let’s dive into the details (us, not your computer). Go ahead and take five if you need to; we’ll be here with our two cents’ worth.



Whether it’s your first year as a freelancer or you’ve never worked a nine-to-five, there’s always room to improve profits. Smarter planning solutions can be a factor in whether or not you’ll be adding cash to your account. With the profit and loss statement (P&L) or also known as the income statement, you’ll be able to see whether or not you generated revenue or accrued costs during a specific time period. Business owners should run this financial report monthly, quarterly, and yearly.

Honestly, check it out as often as possible to make sure things are in order. For many small businesses, this report is probably the most important of them all. It tells you how much money you’re making and where it’s coming from. For example, you’ll be able to see at a quick glance how much money is coming in from your clients, social media ads, email marketing, or those beautiful signs you posted in every coffee shop in your neighborhood. It will paint a vivid picture of what’s working, what’s not, and how you can optimize parts of your business to help your numbers grow.



We can’t stress this enough, continuous planning is key to increasing profit. The balance sheet gives you a comprehensive snapshot of assets (what you own) and liabilities (what you owe) at any given moment. It’ll feature line items such as your bank and investment accounts, credit cards, loans, inventory, accounts receivable/payable, etc.

With a top-level look from this report, your balance sheet will kill two birds with one stone, summarizing your assets and liabilities.

These reports should be pulled at the end-of-month or quarter-end to examine your company’s financial position. It will give you a better idea of the amount of capital you have to continue your operations. This can be the difference between surviving or splurging on business-building investments—like that filter for the office with the sparkling water option, so refreshing.



The cash flow statement is also essential to creating more profit. However, for the sake of brevity, the cash flow statement is essentially a blend of both your income statement and balance sheet. It analyzes the flow of cash going in and out of your business. As an entrepreneur, your goal is to focus on growing your company and not paying your next bill. That’s why it’s so important to regularly look at cash flow from an operations perspective to better understand your business. In the case that you are low on cash in any particular month, you’ll be able to reach out to your vendors and work with them accordingly before you lose one of your nine lives.



You might be a little bit more familiar with net profit as the amount of money you have left over after all of your expenses are paid. However, the net profit margin report is specific to the number of cents in profit that are generated from every dollar of sales. Why is this important to know? Well, when you’re running a small business, it’s important to follow trends. It’s beneficial to compare your margins to others in the same industry. Ever wonder why pumpkin spice lattes are only offered during the fall? Now you know.

Run this financial report quarterly, over as many years as possible. It will give you a clearer picture when reassessing prices, ad spending, expenses, inventory, sales, etc. Although we love pumpkin-flavored pretty much everything, there are seasonal factors (as well as financial) to offering it only once a year.



The next financial report is also referred to as “accounts receivable days or aging” and “accounts payable days or aging.” Although you may be an incredibly charitable human being, your business is not in operation purely for the joy of it. We are here to make money. Getting paid for your hard work is part of the process, so it’s essential you run these reports to make sure your coin is getting collected.

The AR Days/Aging report informs you on the collections side—who your customers are and whether or not they are making payments on time. The AP Days/Aging report gives you information on who you owe money to and how much. The ratio of the two lets you know if your receivables are piling up faster than your sales. If it’s taking your business longer to pay vendors, it can impact your cash flow—something you want to avoid.



Accidentally purchase too many swimsuits for the season? Overspent on a new suitcase? Can’t return the tracksuits for the summer office Olympics? Overspending can have a massive impact on a small business. This report is critical to examining where your budget can be improved. It compares actual spending to the budget/revenue versus sales projections. Run this report as much as you need to in order to highlight areas where spending can increase or decrease. Doing so can improve your business by identifying opportunities to hire more staff, invest in equipment or gift each of your employees a fancy suitcase (or swimsuit, whatever works).



At the end of the day, it’s all about making money. That includes looking at those who are giving you the most of it. This financial report zooms in on specific customers and what their spending trends are over a given period of time. Obviously, we must build good relationships with our customers and clients. However, this report gives you a better understanding of who your customers are and what they want. You may be surprised to find out your core demographic isn’t who you think they are. Details such as age, location, gender, lifestyle, etc. can positively impact your branding and product offering. With the demand for e-commerce options and social distance alternatives, this report can help you reevaluate your business and diversify your portfolio.

In this modern economy, change can happen quickly, and the ability to assess potential scenarios is everything to your success. Running the right financial reports can truly keep you in seventh heaven.

Nine times out of ten, we know you’d rather focus on anything other than financial reports. That’s why we’re here to help—so that you’re not at sixes and sevens when it comes to balancing your books. As experts in the industry, we understand that passing on this responsibility affords you the time and peace of mind to drive more business. Go ahead and take five. We’ve got you covered, so you’ll never have to feel outnumbered again. Set up an appointment with a financial solutions expert now!


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Michelle Cooper

Michelle Cooper is a powerhouse entrepreneur, CEO of Alchemy Accounting & Bookkeeping, author of Confessions of a Money Rock Star, Your MoneyDate Journal, and co-author of the collaborative book, Women Rising. She has helped many business owners climb out of entrepreneurial poverty into the land of profit.