The role of financial reporting in business
When you set a fitness goal, you keep track of progress along the way. That progress might be tracked by watching your weight go down, or clothes starting to fit better. Or you might be monitoring how much weight you can lift or setting new personal records on your timed runs. Either way, the monitoring helps you to know your efforts are working, and whether you keep going or make some adjustments to improve.
Financial reporting is the business equivalent. Key information is shared with internal and external stakeholders - e.g. managers, investors, shareholders - to inform of the organization’s financial health during a given period of time. It tells of past successes and future plans and expectations.
Financial reporting can include a wide variety of information, including but not limited to financial statements of balance, cash flows, income and equity; minutes on quarterly earnings; reports to stockholders; and financial reports to government agencies including the SEC.
With this information, senior managers make decisions about the future of the company, while investors, creditors, and analysts use it to evaluate the performance of the company and what it might be worth.
Financial reporting and demonstrating company health
At the basic level, financial reporting is so important because any potential investor needs to know the state of affairs before parting with their money. They need to know how well the company is performing, outstanding debt, and asset investments, as well as a realistic timescale for recouping their investment. As such, they rely on the company’s financial reporting to make informed decisions.
Financial reporting also adds depth to numbers. The balance sheet is informative, but it doesn’t explain the decisions that put the company there. Detailed reporting will explain operational changes that affected the finances, positively or negatively, as well as provide the nuance behind profit and loss.
Investors will also be keen to learn about the cash flow, as they recoup their investment not just from operational revenue but from any and all sources of income. With this information, stakeholders learn how much liquidity the company has and if it can afford its obligations.
Internally, financial reporting is primarily leveraged for planning and forecasting. With the financial information to hand, managers can decide whether certain assets need to be sold or if it’s sensible to pursue additional asset acquisition. They can also make strategic plans for the company in both the short and long term.
How Vena improves financial reporting
Vena consolidates everything into a single, central location - including financial, operational, and even HR data. Real-time tracking and auditing means that if one person makes a change, it appears instantly in Excel, so you’ll never again scratch your head wondering if something has changed and who changed it. Vena’s auditing capabilities are so advanced, you can even track changes cell-by-cell, saving significant time in manually searching for mistakes. And an updated report with these changes is only a few clicks away.
Vena understands that while it’s good to catch errors, it’s better to avoid them in the first place. That’s why you can set authorized team members to view, edit, and share data, and withhold those permissions from everybody else. Permissions can be granted to both users and groups, and enable oversight capabilities when it’s time to collaborates.
Best of all, this happens within Excel. All of your existing report templates and formulas remain in use, and you’re able to assign tasks to specific people and automate follow-ups.
Vena’s intuitive report builder enables you to visualize your data in powerful ways.
Build and refresh reports, instantly. The information you need is always at hand.
Reports can be automatically sent to required stakeholders via Excel, PowerPoint or Word.
User case study: from 3 weeks to minutes
PRGX, an analytics firm specializing in audit recovery, used to require two members of staff to retrieve financial data, manipulate it including multiple formats, and present it to stakeholders - every month. Because there are more than 80 stakeholders in 30 countries, they also had to present the data in different languages and currencies. Each month, up to three weeks was devoted to this, and even then it only yielded a basic view of the finances. Since joining Vena Solutions, they’ve reclaimed those three weeks out of every month, and now the team spends its time on forecasting and visualizations to become strategic partners.
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