You probably know that you should be using business reports, but you may not be sure why. And considering all the other tasks that go into running your business, you may not realize what business reports can tell you-and how much they can help you run your business more efficiently and profitably. The business data that you collect every day can be used to generate a wide variety of reports, and we're sharing five of the most popular!
#1 Insight into Employee ROI
For many small businesses, staff salaries are the greatest expense each month. Return on investment can be difficult to track, but a Revenue by Employee report will show you at a glance who your greatest asset is and who might need to improve. Not only will you know who your most valuable employees are, but you'll also have the opportunity to open a dialogue with an employee who may be underperforming. Do they need an additional team member assigned to their project? Or additional tools to improve efficiency? Helping a current employee is always more cost efficient than hiring a new one!
#2 Tracking Client Performance
Are you spending 12 hours working on a client project and only getting paid for six because your estimate was too low? Or are the unbilled expenses on a project so high you end up with no profit? What about clients that are chronically late with payments? A Revenue by Client report shows total revenue generated by each client over the time period you choose and an Accounts Aging report will immediately let you know who needs a late payment penalty clause added to their contract!
#3 Identifying Profitable Products
Analysing the rate of sales for products or service packages you sell provides especially valuable information. If a product is flying off the shelves, you may have priced it too low. Or it may be time to tweak the services included on a package that isn't selling well. This information may not be obvious until you compare your products performance side-by-side in a business report.
#4 Monitoring Cash Flow
Businesses have expenses, which they can't pay without regular income! A Cash Flow Statement tracks the flow of cash as it enters and leaves your business. You'll get a sense of how healthy your business is and how quickly you will be able to respond to changes in your market. A Profit and Loss Statement shows your revenue over a time period, less your expenses. If your expenses are surprisingly high, take a look at the Expense Detail. You'll immediately see what category is costing you the most, giving you the opportunity to make necessary adjustments. Another benefit to using business reports to monitor your cash flow is knowing when a project is ready to be invoiced.
#5 Observing Sales TrendsYou probably think you know exactly when and why your business picks up or slows down, but generating a report may alert you to sales trends you hadn't noticed. Do sales on a certain product pick up at a certain time of year? Does interest in higher-priced service packages peak around tax return time? If so, you might need to adjust inventory, hire temporary staff or run a sale. You'll also have actionable data guiding you as to when and how to allocate your marketing budget.
Generating these reports on your own is easy with a cloud-based accounting system. The time cost can be minimized as many expenses can be imported from your bank and reconciled automatically. And, of course, a bookkeeper can help with any additional data entry that's needed! With accurate, reliable data and a way to organize it, business reports are the best investment toward helping your business grow.