There’s an assortment of financial reports involved in business accounting and bookkeeping. Each one contains the information you need to form an accurate and holistic view of your company’s financial health. There are five reports you should be running on a consistent schedule when you own any small business, especially wineries. Keep reading to learn why these reports are crucial to the success of your company.

Profit and loss

A profit and loss report, also called a statement of operations, provides an overview of your winery’s key performance factors. The frequency of P&L reporting varies – monthly, quarterly, and annual statements all have their place. The goal of P&L reporting is to track sale trends and profit ratios over time.

To complete the report, an accountant compares the income of your business against all sorts of expenses. These include how much it costs to sell your products, admin expenses, taxes, interest on loans, marketing budgets, and so on. The sum of your business expenses is then deducted from the sales revenue to determine your company’s net income.

It’s important to collect and review these reports over time. On report is a snapshot in time. Several forms a dynamic assessment of how well a business is doing. This data is invaluable if you want your small business to thrive for years to come.

Balance sheet

The process of fermenting, bottling, and selling wins is lengthy. Every winery depends on a mix of liquid accounts and long-term investments to support such time-consuming operations. A winery is also likely to have short-term and long-term liabilities and financial backing from shareholders.

These factors are tabulated and compared when your accountant prepares a balance sheet. You’ll find that there are two sections to any balance sheet: one, a summary and breakdown of all company assets, and two, a summary and breakdown of all company liabilities.

The assets section will include the cash you have to spend, the value of your inventory, the equipment you own, and any accounts receivable on your books. The liability section includes accounts payable, unearned revenue, and long-term debts. The final calculations reveal your company’s net worth. Reviewing yearly balance sheets is an excellent tool to track the growth of your winery.

Statement of cash flow

The revenues and expenses of a business fluctuate frequently. And while P&L reports and balance sheets provide immense data sets, they don’t always offer the precision you need. A statement of cash flow allows you to record, track, and predict the actual amount of cash your business has on hand during a given time period.

For example, a winery needs to invest money in multiple pieces of bottling equipment. The cost of the initial purchase, interest owed, and the depreciation of value are all accounted for in monthly expense reports. However, the depreciating value of machinery doesn’t actually remove money from your account.

Instead, a cash flow statement only tracks your liquid assets. Regular cash flow reporting will show you the amount of cash you have on hand throughout each week, month, or quarter. Wineries can use these reports to predict how much cash they’ll have at a future point and enables them to make long-term plans.

Net profit margin over time

The net profit margin of your company is crucial to seeing and developing success in the long term. The basis for this type of report is the net profit margin ratio. The ratio divides your business’s net profit by the amount of revenue earned. To phrase it another way, this report explains how much your net worth grows with every dollar of revenue you earn.

A net profit margin report should be completed frequently. It provides an inside look at how effective your investments in inventory and labor are at producing money from your company. Knowing the profit margins for your company is the first step to course correction when you start losing money.

Accounts receivable versus accounts payable

Reporting accounts receivable versus payable is vital for daily operations and long-term financial planning. These types of reports document either your liabilities or your assets in real time. This information is needed to pay debts on time, budget for upcoming expenses, and ensure your books are accurate as well.

Accounts receivable reports detail outstanding money that your business is owed. In a winery setting, you might have receivable assets because a local market purchased several cases of wine to stock their shelves. Payable accounts are liabilities you are expected to pay. This includes expenses like rental space and raw goods inventory.

Conclusion

These five reports are the pillars of your business’s financial health. They require the utmost accuracy and need to be completed on a frequent basis, which is why Protea Financial can help. As a small business owner, it’s difficult to find time to manage all accounting and bookkeeping. Compiling and reviewing reports on a regular schedule is a challenge.

Additionally, few business owners have the training and expertise required to prepare reports correctly. Protea’s certified accountants and bookkeepers are ready to help. Your dedicated team will ensure that every transaction, asset, and liability is accurately reported. This means you can focus your attention on reviewing the big picture and deciding how best to grow your business.