There is no denying a business owner’s gut instinct can help in the decision-making process. However, if you lack a plan with clearly defined goals, gut alone can interfere with success. Using accounting reports helps outline long term goals, so you can achieve long term success. With the right management reports as your guide, you can confirm when your gut was right and when it might be leading you astray.

 Your CPA or Accounting Advisor can design your accounting and data into an accounting report that helps you manage your business successfully. The key is sharing your goals with your accounting team so that they can set up a reporting dashboard that gets you the answers you need to make the improvements you are looking for.

The Most Revealing Common Accounting Reports

You aren’t alone, if you feel you don’t have time to constantly review accounting reports to manage your business. To maximize your time, it’s all about knowing which reports are the most important. 

You probably recognize these common accounting reports, but you want to be sure you know what they are telling you about your business. 

  •  Profit and Loss: The profit and loss report is all about the net profit based on your revenues and expenses. You can review the details to help better manage your profits, including insights into what parts of your business are most profitable and which ones you may be better off without. This report gets even more interesting when you employ a system like Profit First.
  • Income Statement: An income statement details your income and expenditures over a given period. You can use this as another tool to understand your financial health and how money comes into your business. This type of report followed over time could reveal the best times for cash flow and opportunities to invest in your growth.
  • Balance Sheet: The balance sheet allows you to review all your assets and liabilities. You can use your balance sheet to make period-to-period comparisons and spot trends. A regularly reviewed report can also point out when accounting mistakes are being made through hidden expenses you thought you canceled or when a human error causes a large expenditure you weren’t anticipating.
  • Cash Flow Statement: A cash flow statement summarizes cash and cash equivalents as they come into and leave your business. This report helps you answer that nagging question “ Where is all my cash going? “ Seeing it in black and white gives clarity that other reports miss.

 While reading reports is important, you can get far more value by working with an accounting advisor to help manage your business financials even further so you make the most out of what your accounting numbers are telling you.

Customized Accounting Reports for More Valuable Data

When you share your goals with your accounting team, they can begin to generate the customized reports you need to make the right moves. An accounting advisor digs deeper into the most important aspects of your financial reporting. For example:

  • Profit and Loss by Customer: Setting up and following this report will identify your ideal client who benefits from your product or service and is the most profitable to you. Knowing this information helps you focus your marketing dollars on finding and speaking to that type of customer. It also helps identify your least profitable clients so you can stop taking these types of clients.
  • Profit and Loss by Job: For companies that offer an entire product or service line, sometimes the profits from one side of your business are actually paying for you to fulfill other products and services without you even knowing. Your accounting advisor can set up monthly reports that follow profits per job. Following this information has repeatedly revealed product and services lines that were actually costing the company money.

There is so much information to glean from accounting reports once you know where to look and then getting them set up so you can review them regularly. Instead of running on instinct, suddenly it becomes clear where to invest in hiring to support the products or services you want to expand. You also see the products and services that are unprofitable and can make smart decisions on the next right step.

Inventory Tracking and Accountability

Yes, sometimes getting a system set up seems so time consuming and you’d rather just wing it. But when you have a system to track your inventory you become more accountable and organized over the long term. 

With insights into where you are using inventory and how to use it more effectively you can:


  • Access real-time data to track inventory and remain responsive to customer demand
  • Improve your return on investment by adjusting product inventory, making labor force adjustments, or spotting other money-saving actionables
  • Prevent overstock and outages to save money in areas such as smaller storage spaces
  • Spot emerging trends based on past behavior to improve product offerings
  • Remain scalable to meet demand
  • Use accurate forecasting with more robust calculations based on data reflecting customer or production line behavioral patterns
  • Streamline your ordering process for improved customer service
  • Reduce staffing costs by adjusting labor to meet your needs
  • Reduce human error to improve production and customer service

Business financials depend on many moving parts, requiring careful management that is responsive instead of reactive. Regularly reviewing accounting reports helps set you up for long term success.

What Are Your Long-Term Goals?

Many business owners forget the importance of long term-goals. A conversation about your five-year plan should naturally lead to a focus on long-term goals for the next 10 or even 20 years. Accountant business coaching ensures your short-term goals help you meet your long-term goals. Some short-term steps that provide incremental long-term improvements might include: 

  • Increasing income and reducing production expenses by a certain percentage over a two year period
  • Increasing brand awareness to expand your reach
  • Taking more market share by finding new targets
  • Opening new locations
  • Hiring more employees
  • Developing/launching a certain amount of new products

 Each step should be designed to make a noticeable impact on achieving your longer-term goals.

How An Accounting Advisor Can Help

The investment in time and expertise to set up your financial reporting sets you and your business up for long term success. Our Business Compass Program sets the framework for you to know, understand and lead your financial outlook – not just at tax time, but throughout the entire year. 

Our profitability and growth accounting coaching process gives you access to real-time decision-making strategies, tools and advice empowering you to stay focused on your business and financial goals all year long, year after year.

 Schedule your free 30-minute Introductory Call to learn more about how our program can set you up for the long-term success you’ve been looking for.

For more clarity, confidence and control of your business financials, visit our Entrepreneur’s Guide to Accounting for more valuable articles like this one.