Many businesses have dozens of financial reports that can be overwhelming for the owners to decipher. Financial expert Anthony Keane suggested that business owners can simplify their financial reports by focusing on the three most important reports: the cash flow, aged debtors, and profit and loss statements.
Cash Flow Statement
The cash flow statement answers one of the most fundamental questions for business owners: whether their business has enough money to pay its bills. Understanding the cash flow statement enables the owners to check for cash flow challenges, conserve cash flow or arrange financing if necessary.
Aged Debtors Report
An aged debtors report shows the owner who owes money to the business. Business owners can then plan for when money is due to arrive and check for and follow up overpayments.
Profit and Loss Statement
The profit and loss statement gives the business owners an immediate idea of the past trading period. It identifies whether the business is making money and tracks major costs.
Keane recommended the small business good practice checklist from the CPA Australia website as a starting point for business owners.