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?

Defining Financial Information

Simply put, financial information is anything related to the financial activities and performance of a business. This information is often collected through financial statements or reports covering a specific aspect of a business’s finances, such as cash flow and profitability.

Financial information can provide insights into the past, current, and expected future performance of a business. And as there are different types of financial information, it can be used for a variety of different purposes.

What is financial information used for?

Financial information is used to better understand a business’s overall financial position, operations, and cash flow.

Some of the main uses for financial information include:

• Investment decisions: Businesses can use financial information to determine if they have the necessary funds and solid financial standing to invest in new areas.
• Credit decisions: Banks and lenders can use a business’ financial information to determine if a business is in a healthy enough position to receive a loan. Financial information is also sometimes used as the basis for extending, restricting, or terminating an existing loan.
• Tax decisions: Tax authorities may look at financial statements throughout the year to determine how much a business needs to pay in semi-annual tax installments. These statements are usually reconciled with actual taxable income at the end of the financial year to figure out whether additional tax is owed or if a refund needs to be issued.
• Operational decisions: Financial information may be used to gauge the effectiveness of a business’s operations and make adjustments to things like processes, staffing, etc.
• Product or service decisions: Analysing financial information can indicate whether a business needs to make any changes to its product or service offering, or its pricing, to remain profitable.

Examples of financial information

Financial information is generally gathered in the form of financial statements that show specific details about the financial activities and performance of a business.

The three of the most common types of financial statements include:

Balance sheet

A balance sheet, or a statement of financial position, is a financial statement that lists a business’s assets, liabilities, and equity balances. This information provides a snapshot of a business’ financial position at a particular point in time, such as the end of a quarter or year.

Profit and loss statement

Also referred to as an income statement, a profit and loss statement shows a company’s revenue and expenses over a set period of time, like a quarter or year. It can help decision-makers in a business better understand their returns on investments, risks, financial flexibility, and operation capabilities.

Cash flow statement

A cash flow statement, or statement of cash flows, documents the flow of cash in and out of a business. It shows where money was spent, where it was earned and provides an overview of the 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. Fixing these red flags early on will help you establish a solid foundation for long-term growth.

Streamline your business’s financial information in QuickBooks

Keeping track of your business’ financial information is essential, but doing so manually every month, quarter, or year takes time and effort. 

QuickBooks Online enables you to access up-to-date financial reports, such as balance sheets, cash flow statements, profit and loss statements, and even lets you create your own customised reports in just a few clicks. QuickBooks automatically records and organises your financial information, so you can access your reports whenever you need them.

Not only will these reports help you to 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. Find out more about QuickBooks reports and start your free trial today.