Why is financial reporting important + 5 Best financial reporting tools

217
best financial reporting tools | iTMunch

Without a doubt, financial reporting and analysis are the bedrocks of any modern business. It offers a higher level of insight to the business owner that helps their business stay compliant while also streamlining their expenditure and income-centric initiatives. Whatever are a company’s financial goals, with the right analytical approach, the true power of a business can be unlocked and exponential growth can be achieved.

But what exactly is financial reporting and why is financial reporting important? In this blog we will answer this question and also tell you the 5 best tools you can use for the same.

What is financial reporting?

Financial reporting, essentially, refers to the standard practices followed by an organization to give stakeholders a clear picture of its finances. This includes the company’s revenue, profit, expenses, capital and cash flow. These formal records, as part of financial reporting, provide in-depth insights into a company’s financials. 

Financial reporting can also be defined as the financial result of a company that is released to the public and the stakeholders. 

Usually, financial reporting consists of the following documents and postings:

  • Financial statements, including the balance sheet, income statement and statement of cash flows
  • Footnote disclosures 
  • Annual reports for shareholders 
  • Prospectus for potential investors
  • Any other financial information the organization wants to disclose about itself on its website

If the company is publicly listed, then in addition to the above mentioned items, its financial reporting should also include the following:

  • The annual Form 10-K and the quarterly Form 10-Q. These forms are filed with the Securities and Exchange Commission 
  • The annual report to be issued to shareholders, which can be a narrowed-down version called a wrap report 
  • Press releases which contain financial information about the organization
  • Earnings calls, during which the company’s management discusses the its financial results 

Financial reporting can be subject to the requirements of the applicable framework of accounting, like Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).

Now let us try to understand why financial reporting is important.

Why is financial reporting important?

In the most basic sense, financial information about any organization helps investors, analysts and creditors evaluate a company’s financial standing and make decisions accordingly.

Here’s why financial reporting is important for any business:

  • Disclosing financial condition: Potential investors make investment decisions on the basis of the company’s current performance. Company’s financials are used by not just investors but creditors and other capital providers to gauge the future profitability and safety of their investment decisions. Stakeholders also need to know where the money they invested has been invested and where it is now. Financial statements provide in-depth information about the company’s asset investments along with outstanding debt and equity composition
  • For taxation: One of the most crucial reasons for creating financial reports is that, well, you have to and are required by law to do so. The Internal Revenue Agency uses these financial reports to ensure that the company is paying its fair share of taxes. Organizations that generate a lot of profit have to pay subsequent amounts of taxes. Precise financial reporting helps in reducing the company’s tax burden and helps ensure that all their resources aren’t depleted in a short amount of time
  • For internal decision making: Though financial reports aren’t necessarily the best tools for making all business decisions, the reports can act as the foundation for better decisions. This is why the financial reporting should be accurate and up-to-date – or else, the management decisions based on these reports wouldn’t be reliable

Now that we know what financial reporting is and why it is important, here are 5 reliable, best tools you can use for your company’s financial reporting.

SEE ALSO: A guide to AI based image processing: Phases, techniques and tools

5 Best financial reporting tools

financial reporting tools | iTMunch

1. Freshbooks

Founded in 2004, Freshbooks is an efficient financial reporting tool that’s designed keeping in mind the needs of small and medium sized businesses, freelancers, and self-employed professionals. Its interface and mobile app are user friendly. 

Freshbooks addresses the issue of the counter-productive and error-prone manual data entry and helps users generate profit and loss reports, tax reports and expense reports. 

It is a multi-award winning financial reports software that is also capable of automating various accounting tasks like payments, billable time tracking, expense tracking and invoice creation.

The Lite version of Freshbooks is priced at $4.5 per month that allows users 5 billable clients. Its Plus version, priced at $7.5 a month, allows 50 billable clients. The Premium version of Freshbooks allows unlimited billable clients at $15 per month.

You can check out the full review of Freshbooks financial reporting tool here.

2. Workday Financial Management

Built on a global and adaptive foundation, Workday Financial Management is one of the best financial reporting tools out there. Created by Workday, Inc. Workday Financial Management gives users immediate visibility to their company’s financial performance. 

The reporting system of Workday is highly accurate and businesses can have a look at their financial status in a few clicks. The software seamlessly merges transactions with reporting and delivers interactive insights.

Its other key features include accounts payable and receivable, expense tracking, project accounting, payroll management, fund accounting, fixed asset management and invoicing.

For pricing, you need to get in touch with their sales team.

Want to know more about Workday Financial Management? Check it out here.

3. Finance Pal

Finance Pal is an all-encompassing financial reporting software that’s primarily built for SMEs. With Finance Pal, users get tailored, specialized and accurate financial reports that are in alignment with their organization needs. 

Apart from day-to-day finance management features, it also has a suite of long-term financing features. Its features include custom recommendations, payroll management, tax prep services, income statement and balance sheet preparation, account reports, data protection, sales tax consulting, payment management, access to finance experts and much more.

The best part about it is that users only pay for those features and services they actually use. With its accurate financial recording and reporting system, Finance Pal provides powerful, in-depth insights into the company’s financial health.

Finance Pal provides customized pricing plans to all interested users. The custom quote provided by the vendor is based on the user’s requirements and the features and services they wish to use. 

Know more about this financial reporting software here.

4. Zoho Books

One of the best financial reporting tools out there, Zoho Books can be used to manage clients, invoices and track expenses. It is an intuitive accounting software for small enterprises to help them remain on top of their finances. Its interface is clean and easy-to-use. 

Once looked at the dashboard of Zoho Books can give users a quick view into the business’s real-time financial health. Its detailed financial reporting and in-depth insights can help businesses grow exponentially.

Zoho Books additional features include bank reconciliation, accounts payable and receivable, expense tracking, purchasing, billing and invoicing.

Zoho Books has three plans – Basic ($9 a month, 2 users), Standard ($19 a month, 3 users) and Professional Plan ($29 per month, unlimited users).

Know everything about Zoho Books here.

5. Idu-Concept

If you’re looking for a software that can help you with financial reporting, budgeting and forecasting, Idu-Concept is the one you should go for. It is one of the most convenient, best financial reporting tools that also helps companies track their expenses and also manage their assets and equipment. 

Idu-Concept’s financial analysis and reporting software aims at enhancing visibility and providing complete access to accurate and updated data to its users. 

A few of Idu-Concept’s many functions include revenue budgeting and reporting modules, financial budgeting and reporting modules, asset management, cloud financials, budget management and data analysis.

Pricing of Idu-Concept begins at $50 per user per month. It has Light, Standard and Enterprise versions available. A quote also can be requested from its website.

You can read about Idu-Concept in detail here.

SEE ALSO: FinTech Trends 2021: 6 technologies to watch out for

For more latest IT news and updates, keep reading iTMunch

Image Courtesy

Featured Image: Image by Gino Crescoli from Pixabay

Image 1: Coffee photo created by wayhomestudio – www.freepik.com

Subscribe to our Newsletter!