The Big 5 of Financial Reports: What Accountants Need to Know


As a CPA, it’s essential to provide your clients with the necessary financial reports that will help them make informed decisions about their business. Despite differences in industries, size, or goals, all companies need to have five core financial reports. These reports provide valuable information that helps business owners understand the financial health of their organization. In this article, we will discuss each of these financial reports and explain why they are crucial for your clients.

Income Statement

Also known as the Profit and Loss report, the income statement focuses on a company’s revenues and expenses during a specified period, such as monthly or quarterly. The income statement shows the efficiency or inefficiency of management, underperforming areas, and compares the company’s performance with industry competition. This report is essential because it highlights the numbers that show how well the company is performing.

Budget vs. Actual

This report compares the projected budget to what actually occurred during a specified period. It shows your client’s spending and revenue income data from their income statement and visually displays the information side-by-side with your projected budget. This report helps clients to assess their overall performance, forecast future income, and identify any company areas that perform better or worse than expected.

Accounts Receivable Aging Report

The Accounts Receivable Aging Report is a table that categorizes accounts receivable based on how long an invoice has been outstanding. This report shows how long customers are taking to pay, which is vital information during the collections process. It also gauges the financial health of a company’s customers. If a high percentage of customers are slow to pay, this is a red flag for possible investors and the company’s future health.

Balance Sheet

The Balance Sheet is a financial report that compiles a company’s total assets, liabilities, and shareholders’ equity in one place. It is one of the Big three reports, along with the income statement and cash flow statement, used to evaluate a company. A comprehensive balance sheet will help your clients see trends and make decisions with all of the relevant data in front of them.

Cashflow Statement

The Cashflow Statement shows the money that is moving in and out of a company. This report provides your clients with a way to measure their company’s strength, long-term outlook, and profitability. It helps them understand where their cash is coming from and where it is going.

After you send these five crucial reports, you need to ensure that your clients can read and understand them. Remember, those you send your reports to are not accountants; that’s why they hired you! Breaking things down into layman’s terms and teaching them will improve your client/CFO relationship.

How to Make Financial Reporting Magic Happen

Reach Reporting can help simplify the process of creating and sending financial reports to your clients. We have spent countless hours creating and designing financial reports and dashboards. Our pre-built templates will help you create and send these five crucial financial reports with ease. With our help, you can provide your clients with valuable financial information, help them understand it, and turn it into actionable data.

The five financial reports that we discussed are vital to all businesses. Providing these reports to your clients will help them make informed decisions about their company. Scheduling a demo with Reach Reporting is your first step to creating and sending these reports with ease.

In addition to providing your clients with the core financial reports, Reach Reporting also offers powerful budgeting and forecasting tools. These tools help your clients plan and make informed decisions based on data and projections. With the help of Reach Reporting, you can provide your clients with a comprehensive financial reporting and forecasting solution, helping them take their businesses to the next level. So, what are you waiting for? Schedule a demo today and start unlocking the power of financial reporting, budgeting, and forecasting with Reach Reporting!

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