As a small business owner, it’s easy to keep the engine running day-in and day-out. You’re constantly powering through multiple tasks: checking inventory, wrangling clients to pay you back, and making sure leads are coming in. Heck, you’re even juggling them throughout your day — a balance act at all times. Times can be tough. In the back of your mind, you just know you should be using business reports to make data-driven decisions.
The problem is you’re not sure exactly why… or how.
If you’re already leveraging accounting software to manage your business cash flow and expense management, you’re already one step ahead of everyone else.
Chances are, you can uncover a whole lot of useful business data that can help you:
- Make better business decisions
- Run your business more efficiently and profitably.
The Why: Getting Closer to the Data
Unfortunately plenty of data is useless — it just takes up space. Organized information, on the other hand, becomes critical knowledge. This comes in the form of business reports. Getting in the habit of running monthly financial reports can literally make or break your business.
You might not realize you’re about to get into cash crunch. Just because your business brings in profitable margins does not mean that you’re in the clear. A few late paying clients and boom: you can find yourself in the negatives.
Accurate reporting, when done right, can have many useful benefits for small business owners. These include:
Quicker Business Decision Making
As long as your reports are easy to access (think: grab and go!), you can make swift business decisions on the fly about how much total net income you’re making in any span of time and who is your highest paying client. Many accounting software, like TrulySmall, lets you save each report for later.
Did you uncover data that you want to refer back to? Saving custom reports for later viewing makes it incredibly easy for convenient access.
Anticipate Financial Trends
Do you notice a dip during certain months of the year? Is a certain client who tends to pay their invoices late? Pin pointing these trends are often impossible when you’re up close and personal with the data each day.
But when you take a step back and analyze business reports, you let technology organize the information for you to see trends. For example, you’ll know to set up reminders for a certain client a week in advance to remind them to pay. Or, you can flag certain seasons where you slow down on expenses to make up for the dip. The opportunities are endless!
The How: Using Business Reports to Derive Data-Driven Insights
Like Jay Baer says, the power of data is useless if you’re not using it to extract useful insights. When choosing accounting software, the ability to pull standard reports like your Profit and Loss Statement, Balance Sheet, General Ledger, and so on is key.
Here are some ways that you can leverage business reports today to make better, informed decisions for your small business for the future.
1. Pinpoint your most profitable product or service offering
One of the most valuable data to report on as a small business owner is to find out the rate of sales for each of your products or service packages. Tracking which of your business services or product line is bringing in the highest ROI can tell you which product or service to spend your time improving. With only limited hours in a day, small business owners like yourself need to focus on what matters — what’s truly bringing the revenue in.
How to do it with TrulySmall Accounting: The Profit and Loss Statement
Put to use our Profit and Loss Statement (P&L) by running this report in TrulySmall. If your accounting software already houses all of your business transactions and invoices, TrulySmall makes it extremely easy to pinpoint your rate of sales under the “Income” category.
You can immediately see which expense category is costing you the most and make adjustments. Using the P&L Report, you can even view side-by-side comparison between income and expenses for this year and the year before. Leveraging business reports like P&L to view cash flow also helps you know when a project is ready to be invoiced.
2. Track payment performance
Consistently late paying clients are the death of budding entrepreneurs and small business owners. It doesn’t matter how many clients you have. If they’re not on a consistent invoice plan that’s validated in writing (e.g. a freelance contract), chances are, late payments are inevitable.
How to do business reports with TrulySmall Accounting: Meet the Mini Report and Unpaid Bills and Invoices Report
The great thing about versatile and easy to use accounting software like TrulySmall is how easy it is to get “at-a-glance” information that matters. In TrulySmall Accounting, you can easily view where invoices and payments stand right away. A Mini Report is available at the top of the Invoices page. This mini business report acts as your “Accounts Receivable”. You can use data like Average Time to Pay to help with planning bills and expenses. You can also leverage data like Total Outstanding to know exactly how high your accounts receivables are and Past Due to begin conversations with late paying customers.
The Unpaid Bills and Invoices report in TrulySmall is exactly what it sounds like. Under Reports, it lists all outstanding income (invoices) and expenses (bills) of your business at any given time. This report runs this data based on client and summarizes a grand total for you!
3. Get in touch with cash flow
All businesses make expenses. But with every dollar that leaves, there needs to be money made (income). As a small business owner, staying in touch with your cash flow — even at a high level glance — is critical to making business decisions. That’s because your goal is to focus on growing your company’s revenue rather than paying your next bill. You’ll use it to know the overall health of your business.
From an operational perspective, you can use the Cash Flow Statement to discover leaner months. These insights will incentivize whether or not you reach out to vendors to check on payments or discuss other ways to increase cash during this period.
One useful thing you can do for your business is to compare the cash reported under the operating activities with the net income reported on the Income Statement (P&L). If the cash reported is consistently higher than net income, that’s a great sign: it means the business is bringing in more cash than it’s using. If not, then that’s a red flag that requires further investigation.
Change is happening quickly in this modern economy, and small business owners absolutely need easy access to their financial data to make sound judgment calls quickly.
This is vital to success.
Running business reports like those mentioned in this article are a fantastic way to get started. But above all, it requires leveraging modern and simple accounting software to house all of your data in the first place.
Ready to get started turning all of your data into fruitful insights? Get started running reports in TrulySmall Accounting today with our 14-day free trial. Ever since we’ve introduced our new Auto-Post feature, within minutes, you can create an account, set up your business, connect your bank accounts (optional, but highly recommended!), and let Auto Posting sort and post your transactions for you to your Transactions page. From there, you’ll be able to go into Reports and see all the business reports with all your insights. We promise — it’s really that easy.