Financial report is the official document that showcases a company’s performance and activities on a quarterly or yearly basis. These documents are available for public view which means potential banks and investors analyze them to judge the business’s profitability estimates, future growth prospects, and overall financial health.
For internal stakeholders, financial reports provide a reality check to help them identify what actually happened in the past and how to improve current operations. This is achieved by linking operational KPIs to financial results so that teams can focus on the levers that drive growth and efficiency.
While the purpose of a financial report is clear, creating accurate and timely ones can be time-consuming. This is particularly true for external reporting that must meet rigid standards set by regulatory bodies and investors or lenders. Internal reporting, on the other hand, can be more flexible as it’s mostly used to inform the business decision-making process.
For many companies, generating these documents is usually the responsibility of the finance team. This includes financial controllers and their accounting staff in midsize to large businesses, while small businesses often rely on their lead staff accountant or the business owner to handle the entire reporting process. Other departments like investor relations may be involved in releasing the statements to the general public through press releases, earnings calls, and websites. In some cases, external auditors must also certify the reported information. When done correctly, financial reporting helps a business build trust and establish creditworthiness with suppliers, customers, investors, creditors, and others.
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