Many people ask what accounting reports they should review regularly. Generally, I believe, that you should review the following accounting reports and particular on focus areas mentioned below to keep your accounting records and operations streamlined
Accounts Receivable & Aging Report
Accounts receivable show the outstanding balance of customers. Aging of accounts receivable shows how old are these balances.
Focus on old accounts receivable. Follow up with your customers by sending emails or calling them. Keep yourself updated on your customers’ credit situation and tighten your credit terms for risky customers.
Accounts Payable and Aging
Accounts payable show the outstanding balances of suppliers. The aging of these payable shows how old are these balances.
Focus on negative balances of suppliers. Negative balances mean that either you have paid a bill twice or you have made an advance payment and the goods or services are yet to be received. Thoroughly check your records to confirm or dispel the suspicion of double payment. If you have paid in advance and not yet received the goods or services, follow up with your suppliers.
Daily Sales Report
Daily sales report tells you how many units of goods or services you have sold on a day and how much revenue you have earned on that day.
Focus on the unit price of the goods and services that are sold. Check unusual discounts given to the customers. Compare historical day to day sales and investigate unusual variances in sales.
Budget vs Actual Operations
If you have made a monthly budget document, it should follow the format of the reports generated by your accounting system.
Focus on budgeted vs actual operations and review the actual number of units sold, sales, and unit price against the budget. Review your actual gross profit percentage and compare it with budgeted gross profit. Check your actual fixed expenses against the budgeted expenses. Investigate any unusual variance.
Bank & Credit Card Statements
Most of the payments and receipts are done through your bank account, right. Therefore, it is important to keep an eye on your bank and credit card statement. Subscribe for online statements and make a habit of checking your bank and credit card transactions on daily basis. Review any exceptional item and follow up with your bank in case you find some unusual transactions/ payment. Check with your bank even if the amount charged is small. Hackers usually charge a small amount first and if it goes through, they take out large money from the same account.
Bank Reconciliation Statements
Bank reconciliation statements are made to compare the entries appearing in your accounting system with those in your bank statement. Any difference between the two may be uncleared or un-presented checks. There may be some unrecorded expenses (such as bank charges).
Focus on uncleared and un-presented checks and record any unrecorded expenses in your books.
Cash Flow Statement
Cash flow statements provide information on cash received and paid by the business. Cash flow statements are divided into three sections that are – cash flow from operating activities, cash flow from investing activities and cash flow from financing activities. This statement tells you from where you are generating cash and where it is going.
Focus on cash flows from operating activities and investigate if sufficient cash flow is not generated to finance the investment and paying back the financing. Cash flow from operation is very important to understand and short- and long-term sustainability of the business.
Inventory reports tell you the items in hand and their value on a date.
Focus on quantities that is low. These products may need to be ordered so there are sufficient quantities in hand to meet the needs of the customers