Financial reports are one of the most powerful tools you have for managing your business. They help identify money-making trends and cash flow issues. Yet, the insights generated by these reports rely on precise and timely information. Anything less than perfect will skew the results and your decision-making.
Accounting software simplifies financial reporting. It validates data and applies accounting rules and principles. Moreover, scheduled reports keep stakeholders, investors, and leaders informed. Learn how to use accounting software to create accurate financial reports and ensure timeliness.
Why accurate and timely financial reporting matters
A misplaced decimal point or incorrect figure leads to a long list of problems. Manual data entry errors can result in employees being over or underpaid and incorrect tax filings. One mistake snowballs, as it impacts line after line. Then, staff must spend significant time finding and correcting the blunder.
In the meantime, anyone who received a financial report with incorrect information must be informed and get a corrected statement. As a result, they may lose confidence in your data. Or, worse, in your company's accounting and business practices.
Data accuracy reduces risk, enables better decision-making, and improves productivity. With dependable information, leaders can analyze the information before them without fewer questions about how the figures were calculated. The company faces fewer compliance issues related to labor and tax regulations.
Next, let's talk about timeliness. It's not sufficient to look at numbers from months ago. Leaders need information that is as close to real time as possible. In addition, accountants, auditors, tax preparers, and other external stakeholders don't look kindly on businesses that miss reporting deadlines.
Pulling financial reports together while handling day-to-day tasks is challenging, especially for small businesses. However, achieving data accuracy and speed through manual data entry is impossible. That's where accounting software comes in.
[Read more: What Is the Difference Between Accounting and Financial Planning?]
Accounting software solves business challenges
Accounting software handles bookkeeping tasks, records financial transactions, and supplies business reports. It standardizes processes and formulas, reducing discrepancies. Most platforms have built-in features for account reconciliation, which compares records for errors and duplications.
Additionally, accounting software provides business automation tools and standard reporting features. By leveraging integrations, companies can decrease manual entry and ensure data accuracy. With automated report scheduling, everyone receives updated statements when they need them.
Improve financial data reliability and accuracy
Consistency in accounting terms can be an issue when multiple people create reports or when new employees take a position. Accounting software ensures the comparability and consistency of financial reports. It uses identical definitions, templates, and formats regardless of the time frame or department.
Since accounting systems minimize manual data entry, it decreases risks from human errors, like duplications, typos, and omissions. Accounting software has built-in validation tools to verify data. It applies accounting rules and principles and completes automatic calculations.
Unlike manual systems, accounting software automatically updates records across multiple sheets to reflect changes, which promotes data consistency and reduces errors. Some platforms offer audit trails and backup solutions. These features allow finance departments to monitor changes to financial reports and data.
Many accounting platforms have built-in tax reports for sales and payroll. These are ideal for preparing tax returns or a financial statement audit.
Ensure compliance by delivering reports on time
Reporting deadlines can bring financial departments to a standstill. Accounting software automates these tasks, allowing staff to export them in different formats, such as Excel, PDF, or XML. Indeed, accounting systems are a must-have tool for businesses that report to creditors, auditors, regulators, or investors.
Many accounting platforms have built-in tax reports for sales and payroll. These are ideal for preparing tax returns or a financial statement audit. The financial reports categorize the data, making it easier for accountants to view information and calculate tax credits.
[Read more: 3 Questions to Ask Your Accountant Before Filing Taxes]
Stay informed automatically
Financial reports should be accessible yet secure. When you or financial managers need a report, it should be in your inbox or just a few clicks away — it should not require extra hours or days because a staffer was on leave or someone didn’t submit an expense report.
Paid and free accounting tools pull data and update statements automatically. You can click to download cash flow statements or balance sheets. If you want to review the same reports regularly, consider choosing software with a scheduled reports feature.
For instance, QuickBooks users can pick times and dates to email one or more financial reports. It offers summary and detailed reports about sales, expenses, and customers, including income statements and accounts receivable (A/R) aging reports. The software calculates your revenue, gains, losses, and expenses automatically.
Collect financial data from third-party apps
Your accounting software can connect to your bank account to record transactions automatically. Then, you simply run the reports you need to see how much cash you have in the bank, monitor your net profit, or get other financial data.
Suppose your company uses HoneyBook to manage clients, schedule appointments, and invoice. It integrates with QuickBooks Online. Any time a customer makes a payment, specific information syncs with QuickBooks, including the transaction fees, tips, discounts, and line items.
Accounting software integrations include the following:
- Payroll software or services.
- Email and calendars.
- Expense management tools.
- E-commerce platforms.
- Credit card processing services.
- Point-of-sale systems.
Generate financial reports in accounting software
Most accounting software makes quick work of monthly small business financial reports, like profit and loss statements. Aside from general accounting statements, many software solutions offer pre-built reports.
These reports provide more details about a specific business area, such as client or vendor billing. Businesses use them to get a real-time view of where they stand before making a decision or taking action.
Patriot Accounting Software has over a dozen financial reports, including the following:
- Vendor payment history: Explore payout categories and 1099 types.
- Sales tax report: Always know how much your business has collected.
- Customer estimates: See statuses for all jobs you've estimated for clients.
- Bill listing: Manage outstanding bills at a glance.
- Customer payment history: View when and how clients paid your business.
- Unpaid customer invoices: Quickly find out who owes you money.
[Read more: 5 Financial Planning Tools for Small Businesses]
Customize reports without sacrificing accuracy
Once you set up your chart of accounts, you can customize reports and attribute income to specific sales representatives or locations. Report customization extends to what details you want to display and the layout. Zoho Books lets users save preferences to run custom reports while still accessing standard templates.
NetSuite offers cash management tools, including real-time dashboards. You can perform what-if analyses and forecast future cash trends. It lets you create predictions that account for current and historical data.
Leverage accounting tools to:
- Measure business profitability by looking at regions, products, or clients.
- Add extra industry, department, or product-specific data to standard reports.
- Keep tabs on specific project costs.
- Prepare financial documents for selling your company.
Ensure precision through access controls
It's impossible to ensure accuracy if you can't control who's accessing your accounting software and reports. Many platforms allow businesses to establish different roles and permissions for software access.
FreshBooks has manager, employee, limited and full-access accountant roles, contractors, and business owners. Report-level permissions may give some users view-only access, whereas others can customize the layout or create and edit them.
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