No matter the size of your business or the industry you operate in, keeping track of key financial information is essential to long-term success. With the right financial information, you can make better business decisions, deal with issues early on and lay the foundations for sustainable growth.
But what do we mean when we talk about “financial information”, and how can you use it for your business? This guide covers everything you need to know.
Simply put, financial information is anything related to the financial activities and performance of a business. Most often, this information is collected through financial statements or reports that cover a specific aspect of a business’s finances, such as cash flow and profitability.
Financial information can give a picture of a business’s past performance, current performance or expected future performance. Different types of financial information can be used for different purposes, as we’ll cover below.
The general purpose of financial information is to understand a business’s overall financial position, operations and cash flow. Some of the main uses for financial information include:
Financial information is generally gathered in the form of financial statements that show specific details about the financial activities and performance of a business. Three of the most common types of financial statements include:
A balance sheet (also called a statement of financial position) is a financial statement that lists a business’s assets, liabilities and equity balances. This information gives a snapshot of a business’s financial position at a particular point in time, such as the end of a quarter or year.
Also called an income statement, a profit and loss statement shows a company’s revenue and expenses for a period of time, such as a quarter or year. It can help business decision-makers better understand their returns on investments, risks, financial flexibility and operation capabilities.
A cash flow statement, or statement of cash flows, documents the flow of cash into and out of a business. It shows where money was spent and where it was earned and summarises the amount of cash a business has on hand for a particular period.
Overall, financial statements help you assess your business’s financial health and spot any red flags that can indicate trouble. Addressing these red flags early on will help you establish a solid foundation for long-term growth.
Keeping track of your business’s financial information is essential, but doing so manually every month, quarter or year takes time and effort.
QuickBooks enables you to access up-to-date financial reports, including balance sheets, cash flow statements, and profit and loss statements, and even create your own customised reports in just a few clicks. QuickBooks automatically records and organises your financial information, so it's quick and easy to access up-to-date reports whenever you need them.
Not only will these reports help you better manage your business, but they will highlight areas in need of improvement and opportunities for growth. Get real-time small business insights with all the financial information you need at your fingertips. Access free tools and templates and start your free trial today.
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