top of page
  • Writer's pictureTitus Kuepfer

Why Reports MATTER

You own a successful business. You are making good money. Every now and then, you take a peek at your checking account to make sure there is plenty of money in there. You have a certain number that you like to see in your bank, and when it dips below that you get a little nervous. What you don't have is an objective source of truth about your company's financial state at any given point.

That's because you aren't fully utilizing your reports.

Bookkeeping Reports

Reports matter. Here's why...

  1. Decision making: Reports provide valuable insights that help you make informed decisions. Maybe you want to buy a new piece of equipment that will make your workflow much easier. You know you will spend a lot less time on a given task if you had this new toy. However, you aren't sure if your business is in the position to handle another loan. You want the assurance that you will be able to make the monthly payments and still earn enough profits to invest back into your company and take out the occasional owner's draw for your teenager's college fund. Without accurate reports and the ability to understand them, there is no objective source of truth that will guide you in making this decision. You will have to rely on your "gut feeling" and will wonder if it was the right decision down the road when the finances get a bit tight.

  2. Performance evaluation: Every entrepreneur loves dreaming big. Maybe your company has some good traction and is easing out of the "failure-prone" stage. You have audacious goals for expansion and set a goal to reach a million dollars in revenue with a 15% profit margin by 2026. In order to reach that goal, you know you need to reach certain milestones in sales, profitability, and customer acquisition. Without clear reports that outline growth, trends, and profitability, you won't have the necessary information to make the course corrections needed to reach your big goal.

  3. Resource allocation: You've got several different service lines or sales items that you offer to your clients and want to know which ones are the most profitable so you can invest your valuable time and resources into them. Without accurate reports that show these trends over time, you will once again be relying on guesswork.

Your Most Valuable Reports

QuickBooks offers over 20 reports based off of your companies data. Some QBO versions have up to 65 reports. Additionally, you can create custom reports tailored for your unique company. Below are listed some of the most important reports that will enable you to stay attuned to your company's financial state.

  • Profit & Loss: Also known as your Income Statement, the Profit & Loss report is the most important and well-known financial report. Your P&L lists the following:

    1. Total Income: Also known as gross revenue, this is the total amount of money your business made before subtracting any costs and expenses.

    2. Cost of Goods Sold: The "cost of goods sold" (COGS) refers to the direct costs incurred by a company in producing the goods or services that it sells. This could include the cost of products sold to a customer, payments to subcontractors, and other expenses directly tied to the production of of the goods and services sold by the company.

    3. Gross Profit: This figure is the Total Income minus Cost of Goods Sold.

    4. Expenses: Your Operating Expenses are the costs associated with running a company's day-to-day business operations. These expenses are incurred in the ordinary course of business and are necessary to generate revenue.

    5. Net Income: This is the most important number in your business. Your net income is your Total Income minus your COGS & Expenses and reflects how profitable your company is. It's the ultimate source of truth when determining if you have a healthy company or not.

It's important to carefully analyze your previous month's P&L at the close of each month. You can also compare your P&L to a previous month, quarter, or year by using the "Compare another period" feature in QuickBooks Online. This will help you understand your company's growth and profitability trends.

  • Balance Sheet: This under appreciated report serves as a snapshot of a company's financial position at a specific point in time. It summarizes the following:

    1. Assets: This is everything of value that your company owns and can use to generate revenue in the future.

    2. Liabilities: Liabilities encompass a company's debts that arise during its operations.

    3. Equity: Equity represents the remaining value in the assets of a company after deducting its liabilities.

Your Balance Sheet is a helpful source information that will show you important figures like cash in the bank, credit card debt, loans and lines of credit, payroll liabilities, and accounts receivable. Pulling a Balance Sheet report is a great way to help you understand whether or not you can make that big investment you have been itching after.

  • Accounts Receivable Aging Summary: We all know how hard it can be to make sure that customers pay on time. This report will show you exactly which customers have outstanding invoices that are overdue. You can then send out reminders to your customers or mark invoices as bad debt if you don't think you will get paid.

  • Accounts Payable Aging Summary: This report is almost identical to the previous one, but outlines bills you need to pay to vendors. Avoid late fees and maintain good relationships with vendors by closely monitoring this report and paying your bills on time.

These examples just scratch the surface of all the valuable reports available on QuickBooks Online. All of our bookkeeping packages include end-of-the-month reports and insights that will help you keep your hand on the pulse of your company at all times.

14 views0 comments

Recent Posts

See All


bottom of page