For business owners and any business, an accurate financial statements is very important. Why is it considered to be crucial?

There are three significant reasons for it:

  1. Financial statements describe the company’s performance and value.
  2. Financial statements are used by others to measure your business
  3. Financial statements help the owner to manage the business

However, some owners underestimate this importance. Especially for those who just started their businesses. Their main concern would be about promotion, market penetration, and gain customers. They start to think about the financial statement when some problems occurred. Soon this situation will lead your business to the lack of competitive.

A financial statement is not only about describing your business cash flow. It is crucial for your company because the financial statement is the base to take any managerial decision, planning strategies, determining success, estimating failures, and the information source for other parties.

There are three points to learn in creating financial statements: cash flow, profit and loss, and balance sheet.

  1. Cash Flow

Cash flow is your business daily records, both record your expenses and revenues. Recording the cash flow is very crucial since it is the base to create other financial reports.This daily record will allow you to create monthly recapitulation. Before your business started, cash flow is used to create the cash flow projection, the estimated cash flow based on the expenses and revenue assumptions.

2. Profit and loss report

This report tells you about your company’s performance. It shows you the revenue earned and expenses in the certain period of time. This report is designed to recognize your profit.

3. Balance sheet

The balance sheet is made at least once in a year. The balance sheet is to show you the description of your assets and liabilities at a certain period.

A financial statement is required to decision making and strategic planning. The working capital statements, cash flow statements, are recorded every day for evaluating how much money the company is earning, how much money they need, the reserves, and how the company should increase sales and boost financing.

At present, preparing financial statement is no longer complicated and time-consuming. The advanced technology has encouraged the software developer to create accounting software. One of the outstanding software developers is Zahir Accounting. Zahir Accounting provides user-friendly accounting software. This software allows the users to create financial statement easily. All reports are automatically made and completed by ratio analysis, break event, point analysis, and other interactive charts. These features allow the users, even those without accounting knowledge create financial statements in seconds.