Posted by Jan Victor Valencia
Mar 18, 2022
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Is your business performing well? An effective way to know this is through financial statements.
Financial statements are documents that let you know which products are profitable, the numbers to improve, and the expenses you incur from daily business operations.
Here are the three important financial statements you should monitor regularly:
1. Cash Flow Statement
It shows the amount of cash your e-commerce business has generated and used during a specific reporting period.
A cash flow statement is useful in:
- Evaluating your business’s cash flow position.
- Creating cash flow projections.
- Securing investments, loans or lines of credit.
2. Profit and Loss Statement (P&L Statement)
Profit and loss statement, also known as income statement, is a type of report summarizing all your revenues, sales and expenses. It also provides information on your net income or net loss.
A P&L statement is useful in:
- Determining how profitable your e-commerce business is in a monthly, quarterly or yearly basis.
- Making wiser decisions based on concrete data instead of relying on guesswork.
- Preparing and filing your taxes.
3. Balance Sheet
This report provides an overarching view of your total assets and total liabilities. It also shows how much your e-commerce business is worth at the given reporting period.
A balance sheet is useful in:
- Assessing your business’s financial standing.
- Benchmarking your business performance against the competition.
- Providing supporting evidence to potential investors about your business’s net worth.
Preparing your financial statements regularly gives you better control of your finances. But if you have limited time and workforce to prepare these documents, you may want to consider working with an outsourced accountant.
D&V Philippines can build your accounting team from the ground up. Aside from bookkeeping duties, we can also help you with various e-commerce accounting tasks. We can also assist you in migrating your desktop accounting data to cloud accounting software and connecting the latter to your e-commerce platform. This would result in a faster and more accurate accounting process on your end.
Contact us today to learn more about our e-commerce accounting services or download our latest whitepaper, Succeeding Online: Refining Your Accounting Processes through Technology and Automation, to find out how we make use of technology to improve your accounting processes.
