For any business whether small, medium or big, the significance of financial reporting cannot be underestimated – it provides information about the financial position and changes in the financial situation of a business. However, the flip side of that coin is that financial reporting is complex and many businesses find it challenging to assemble the right team of people that can keep them in compliance as well as provide timely information in a format that allows their management team to make informed decisions when needed.
Some ‘Financial reporting’ challenges that are faced by small and medium businesses (SMBs) are outlined below:
- 1. Recording financial transactions The process of recording all financial transactions is called bookkeeping and it includes records of sales, purchases, earnings, expenses and payments. It is common for business owners to put bookkeeping tasks on the back burner as their focus is on the growth of their business. However, not recording transactions accurately, or in a timely manner, can impact monthly cash flow and other financial reports as well.
Not having the assistance of a professional service provider leads to inaccuracies in the financial reporting system. Therefore, it is a best practice to partner with professionals that can help to ensure accuracy all along the way.
- 2. Manual processing of financial reports Most business owners are still dependent on creating financials from data contained on manual created spreadsheets which inevitably leads to high error levels – both in the process and in the reporting. Inaccurate data entry or technical glitches can bring huge losses to the company and can even damage the reputation of the organization. Furthermore, manual processing of financial data results in wasted time, money and human talent and also leads to delays in accessing critical information to make time-sensitive decisions.
- 3. Preparing balance sheets Balance sheet is an integral part of financial reporting as it paints a true picture of how much the business is worth, taking into account the assets, liabilities and equities. Incorrect balance sheet results in incorrect valuation of the business which can turn off potential financiers or investors and make the business look less profitable than it actually is.
Is your business facing any of these challenges?
One feasible way to overcome these challenges is to leverage the services of a finance and accounting outsourcing provider who can take on the responsibility to manage all your financial reporting needs so that you can focus on more strategic activities required to grow the business.
Quatrro, can streamline the financial reporting for a business, enabling small and medium business owners to review easy-to-understand P&L, Cash Flow Statement and Balance Sheet reports in a timely manner and respond proactively to the emerging trends.