Reports with Different Perspectives

I mentioned in a December blog (https://muirassoc.com/blog/2010/12/16/finishing-strong) that looking at financial reports compared to last year might let you see if you are better off than last year or not.  There are a few more ways you can look at these reports that might give you more insight into your business.

For starters, if you are on a cash basis for tax purposes, I suggest looking at reports in both the Accrual basis and the Cash basis.  (If you’re not sure, look at your last tax return for your business and you’ll see which box is checked – cash or accrual.) If you don’t know the difference in terminology, a simple explanation is that when you’re on an accrual basis, your income is as of the date of the invoice (whether or not your customer ever pays) and your expenses are the date of your bill (whether or not you pay).  When you’re on a cash basis,  income is when you receive payment and expense is when you pay your bill.  While there is more to it than that, this is how QuickBooks will calculate your income and expenses.  When you review reports on an accrual basis, you’ll get a better picture of your business while on a cash basis, you may see more erratic fluctuation with your income and expenses.  So, you could see some big differences when you look at the reports both ways.

When you run your Profit and Loss, click on Modify Report.  Notice that you can have columns for Percent of Income, Expense, Row or Column. I find that running this report with a couple of those options checked off helps me see my business in a different light – just how big a chunk of the income is payroll or cost of goods.

Run your Profit & Loss and Balance Sheet for multiple years  at once and select Year for column. Again, if the last couple of years have been slower (or better), this lets you take a closer look at what’s improved, what has not.

While I love the Company Snapshot and have modified mine to look at various aspects of my business, you can get more detail and see more variations of some of the graphs by going to the Report Center. For instance, with the Sales Graph, you can choose by item, customer or rep. The Income and Expense Graph, you can zero in on income or expense and look at account, customer or class.  Personally, I find that I can see trends or make other observations that I don’t easily notice when looking at numbers.

So take a few minutes to make some comparisons and see if you pick up on any trends or other observations that help you in your business.  I’d love to hear what reports you like and why.

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