What is financial reporting and why is it important for your business?

Financial reporting is one of the most important roles a finance department has. What is financial reporting and how do you ensure it’s in place at your organisation? Our handy guide contains everything you need to know about the process, why you should bother and will protect you from any compliance pitfalls. 

Financial reporting is how a business shows its financial data to key figures both internal and external. Think of it like your company MOT. It’s a way to show the financial health of your company, and to get an understanding of where improvements can be made.

If your company wants to keep track of some of its most important assets and costs and to present that information as clearly as possible, then financial reporting is important. Every single part of the business is affected by finances, so you need data to make sure you’re being held accountable Without it, the broader finance team won’t be able to keep the rest of the business informed. That can lead to all kinds of issues.

There are loads of reasons that financial reporting is important. From protecting you from compliance issues to helping you raise capital, having clear records can transform your business in a variety of ways. Here are some of the most important. 

There are several key benefits to financial reporting that make it a great addition to any business. Here are some of the most important ones that you can expect to see.

Financial reporting does come with a degree of responsibility, as you must keep accurate records and ensure they are auditable. A lot of the following falls under the Companies Act 2006 (CA 2006), which requires that the annual accounts of a company are true and fair. There are two main frameworks that UK listed companies can choose from. 

The kinds of financial reports that are useful to you will depends on the size and shape of your business, but there are numerous kinds of reports you can use. Understanding each will make it much easier to prepare your reports. 

There are many groups that will get use out of financial statements, but they all use them in a slightly different way. Here are some of the most important users you’ll need to consider. 

Financial reporting can feel like a minefield at times, and keeping things accurate is of the utmost importance. Finance from MHR is your key to simplifying the whole process without stress and without burdening your team with loads of complicated admin and technology to learn. 

You’ll be able to drive informed financial planning with clear and accurate reports that reflect the true state of your business. Using a single source of data reduces the risk of errors and manual data entry, freeing your team to generate effective insights.  

Protect your profitability and dodge the skill gaps that plague the industry, creating a healthier company for years to come.