Tracking the financial data of your business is not just extremely important for running your day-to-day expenses, but it is also important for showing your track record to potential clients and future investors. Businesses that have a proven track record, maintained within their files, tend to generate better interest from investors and potential clients.
In addition to creating a good reputation in the mind of your investors and clients, keeping tabs of your financial data in the form of properly recorded data can also make filing taxes easier for you. Taxes that are filed at the true business income tend to be a true representation of your profitability, in comparison to the impoverished of window dressing implemented by many businesses in today’s day and age. Additionally, keeping a track of your financial statements can also assist with the development of your cash flows structure.
Cash Flow statements are imperative for your organization and they should best be maintained for optimal cash efficiency. In case you haven’t been updating your cash flow statement, you’d be missing out on a raring opportunity to manage your cash reserves the way you want, and to get the desired results from it.
To make and finalize your financial statements in the best possible manner, you would have to get the right templates and formats to help you out. These templates can all be outsourced from one vendor, or you can go looking out for options from different service providers in the market. Needless to say, the money you invest on the templates would surely be repaid in the form of increased interest from the investors and other stakeholders.
So, here are just some of the templates you would need over time!
Balance Sheet.
The balance sheet, or the statement of financial position, provides you an overall and detailed snapshot of the small business that you’re running. To simplify the balance sheet and its template, it follows a simple equation that can be equated as liabilities plus the owners equity = the total assets of the business.
As the name suggests in itself, both the parts of this equation should balance out and one shouldn’t exceed the other. The balance sheet is distributed into numerous other sub-sections that include current assets, non-current assets, current liabilities, non-current liabilities and the equities or financed-by section of the website. The current assets are basically all holdings of the business that include cash, the amount in the bank or other financial assets that can easily be transferred into cash within the matter of a year at most. These current assets usually include inventory, accounts receivable from debtors and prepaid expenses. The other category of assets include non-current assets, which refers to other tangible assets like equipment, machinery, buildings, land, furniture and other essentials that will remain with you for a more fixed period of time, in comparison to the others.
Liabilities, which follow assets in the balance sheet, can be broken into short-term or current liabilities and non-current or long term liabilities. Short term liabilities will be for less than a year, but long-term liabilities will be for more than a year’s time, like a bank loan. The final equity section will include the financed by details of the bank.
Cash Flow Statement.
The cash flow statement puts the light onto the amount of cash coming in and going out of the business. Cash inflows and outflows, as they are called, track the cash spending of the business and then help businesses make an in-depth analysis of their liquidity for the coming future.
Profit and Loss Statement.
The profit and loss statement or the income statement as it is also called may typically cover a period of a couple of months or year. The purpose of the income statement is to find out the profit after a given period of trading. The profit is computed by finding out the gross profit, and then subtracting the expenses from it.
Forecast and Budgeting.
Budgeting is the most complex of all these statements, and it helps with optimizing your future updates. You can use multiple templates here to work on excel and create annual and monthly budgets. With the use of the right software, you can also track your performance over the period of time.
