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5 Financial Reports To Share With Your Board

Are you preparing for a big board meeting? As a start-up, you might feel nervous about presenting your finances to the board before your business is fully established and making the sort of money you know you’re capable of. How can you show the board that you’re well on your way to building a profitable business?

Let’s take a look at five key reports that will impress the board and showcase your business’s performance.

Jump to section:
1. Profit and loss statement
2. Cash flow statement
3. Cash flow forecast
4. Equity statement
5. Balance sheet

1. Profit and Loss (P&L) statement

A P&L statement shows your business’s profits and losses over a given financial period, whether that’s a month, a quarter or a year. Board members will be interested in your P&L statement as it’ll help them to see at a glance whether your business is capable of generating profit, and where spending could be increased or decreased to make the business more profitable.

A P&L statement helps board members and investors to understand what your business has spent money on in the past year or quarter – something they’ll be paying close attention to, particularly if you’re not making as many sales as anticipated.

As a business owner, you’ll be able to see where you can generate profit by increasing revenue, decreasing costs, or both, and board members will be scrutinising the figures to see whether the strategies set at the beginning of the financial period have been successful – and if not, why not.

The final line of the report is the bottom line, that is, your company’s net income, which is commonly used to show how profitable your business is. A P&L measures profitability rather than cash flow – other reports offer a better measure of your cash flow, and both are important for the board to see.

2. Cash flow statement

A cash flow statement shows how much money you’ve had available to the business over a specific period, based on historical data. It helps your board members to understand how well the business has been managing its cash position, and whether there’s been enough cash coming into the business to stay on top of outgoing expenses.

There are three main components of a cash flow statement: cash from operating activities, cash from investing activities, and cash from financing activities. Breaking cash down into these sections will help the board understand how much cash has been generated from different sources, which could influence strategic decisions and the cash flow forecast.

Read more: 3 Cash Flow Graphs Every Business Should Use >

3. Cash flow forecast

A cash flow forecast allows board members to see, in real terms, the money that is likely to come in and go out of your business in the future. It shows predicted changes in cash over time and is arguably a stronger indicator of a company’s financial health than simply looking at forecasted profits. Just because you’ve raised an invoice, it doesn’t mean you’ve actually received that money yet.

A cash flow forecast can be presented alongside your cash flow statement to show your board that you don’t just have the historical data, but are also prepared to look ahead to the future. This report shows a plan of when cash will come in and out of your business, and what you’ll be left with at the end of the month. This report can provide valuable reassurance and can also be used for important decision making

This is particularly useful for start-ups, as you’re likely to incur more costs than revenue at the beginning of your business journey. The board will be looking for evidence that you’re planning properly for the months to come and aren’t going to run into cash flow problems.

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4. Equity statement

An equity statement, sometimes also known as a statement of owner’s equity or statement of changes in equity (or a statement of retained earnings in the USA) records the changes in a business’s equity throughout the year. It reports on things such as earned profits, dividends, equity coming in and out of the business and net losses.

It’s one of the shortest of the essential board reports, because there’s unlikely to have been many changes throughout the year that affect equity, only contributions and withdrawals from owners or shareholders.

The report is simple and easy to understand, presented as the equity balance at the start of the year, plus net income and equity contributions, minus net losses and equity withdrawals. Board members will be interested in this report to see how much the total shareholders’ equity has changed during the reporting period.

5. Balance sheet

A balance sheet is one of the essential reports that you’ll need to showcase your business position to the board. This document shows three key things:

  • Assets
  • Liabilities
  • Equity

Assets are owned by your company and can be measured objectively – this could include things like your office if you own rather than rent, furniture, or company vehicles. Liabilities list everything your company owes, such as any payments to be made to suppliers, salaries to pay, or tax owed. Finally, equity (sometimes also called shareholders’ equity, or owners’ equity for privately-owned companies) is the amount of money held in your business that would be returned to your shareholders in case of your company’s liquidation.

This is expressed in the equation:

Assets = Liabilities + Equity

This equation shows that a company’s assets are always balanced by the equity investment and money owed. Business growth tends to lead to more assets, but it also means that companies tend to have a higher amount of debts and potentially more equity to aid growth, so it’s important to consider the equation as a whole rather than simply looking at any one aspect.

A balance sheet splits the entries into five different sections:

  • Current assets, i.e. short-term assets that will be converted to cash within a year
  • Non-current assets, or long-term assets that are more permanent
  • Current liabilities, or short-term liabilities that will be paid within one year
  • Non-current, or long-term, liabilities that are due to be paid in more than a year
  • Equity

The balance sheet offers a ‘big picture’ view of a company’s financial status, which can guide any decisions on future investments.

How to present information to the board

You want to present your company’s financials to your board members in the best possible light – and that means sharing the information in a format they’ll understand, even if they don’t have a financial background. Ensuring your reports are in an easily understandable format makes good sense, no matter who you’re presenting to.

Many people find visuals more digestible than columns of numbers, meaning that graphs and dashboards are often a better choice for financial reports. It’s also easier to highlight trends and changes in this type of format than it is with long lists of numbers, so you can craft a narrative throughout your slides and better showcase your business’s performance.

Remember that board members will ask if they want more information about any of your finances, or have specific questions on these reports. Keep it simple with graphs and tables that are easy to read, and clearly highlight the key things your board members are looking to understand:

  • Has the business become more or less profitable? If so, when and why?
  • Are there any long-term trends?
  • What is the company’s current cash position, and what does the forecast look like?

With Float, you can export your cash flow forecast as a visually appealing, easy to understand graph that makes it clear to your board members where your business is going and how much money you have coming in.

Start your free trial today and show your board members how your business is progressing.

Further reading:

How To Forecast Revenue

Louise Bayley-Boyd

Digital enthusiast, passionate about helping small businesses survive and thrive.