Three Fundamental Business Financial Reports to Prepare

Small business accounting is a rudimentary component of company growth. By monitoring results, decision-makers can better inform external financial partners, keep the company on track, and plan for the future. However, you can’t translate the same information into a single financial statement. Instead, these three standard financial reports use comparable data to serve different purposes.

External Party Financial Report

Most financial parties will request that an outsourced accountant prepare a financial statement to present a reliable and objective perspective on how well your company is performing.

In particular, bankers will zero in on whether your business is generating enough profit to service your debts comfortably. They will take a closer look at reasonable performance metrics and how efficiently you’re generating wealth.

On the other hand, an investor will take an in-depth look at whether the capital they’ve deployed into your company is generating an adequate return. While also interested in your business’ profitability, investors will also want to know the growth rate of your revenue. If your profits are growing faster, it’ll indicate that you productively contain costs. If your revenue is rising, it may be a cause for concern.

Projections and Forecasts

A financial forecast will equip you with sufficient information to craft an operating budget and plan around resource requirements. A method of improving and growing your business, economic projections give operational managers something to shoot for.

Though hardly a literal prediction of the financial future, forecasts provide a useful starting point in indicating how much in sales businesses need to make to break even. Tracking against your forecast will allow you to pinpoint where you’re falling short and may need to cut back on costs. Overall, they’re a practical tactic for ensuring you don’t end up in the red.

Internal Reports

Management reports are far more detailed than an external summary. A marketing breakdown, for instance, might correspond to spending on various channels to give teams a better idea of what expenses need redirecting or adjustments.

A granular management report should isolate sales and expenses according to business lines and products. From here, you can track performance by geographic location or customer profile.

Take note of financial ratios, making sure to align them with the appropriate key performance indicators. Separate internal forecasts by business segment, formulating a workable budget for each. As results begin to funnel in, you can more accurately determine whether they’re tracking on plan. If not, you can quickly make adjustments in the early stages of the month.


Within a business, money hardly ever follows a linear path. Intertwined with dozens of moving parts, categorizing financial statements to satisfy various goals can provide you with a clearer understanding of how well your operations are performing, how you’re earning money, and where it’s going. Along with an internal breakdown of business economics, you’ll want to keep external partners informed promptly and in detail.

At Measured Growth CPA, we equip our Ontario accountants for entrepreneurs with a client-focused mindset and open line of communication. By making what is important to you equally as important to us, we take every opportunity to grow your business.