Use profit and loss statement software so your financial data is always up-to-date

Demand from branch managers through to board members for up-to-date, accurate financial information has made monthly financial performance unfit for purpose. For many businesses, static report versions of financial statements including the profit & loss statement (income statement), balance sheet and cashflow statement aren’t effective in responding to the speed of business.

The:  identify issue—consider root cause—respond cycle has compressed to such an extent that new ways to extract actionable insights from financial data have become a business imperative.

There isn’t time for the traditional back and forth exchange in excel spreadsheets between the finance team and different departments because the market demands real-time information and the need to be able to spot and solve problems on the fly. Customers want answers on pricing, management need to know if cost of goods sold (COGS) are affecting the bottom line and sales want to know what percentage total revenue has changed by increasing sales with an existing customer - now.

Business owners, managers and finance teams need interactive, explorable and dynamic representations of financial data to extract actionable insights on the performance of their people, products and divisions. As a result, there has been significant interest from finance specialists in applying business intelligence to financial analysis. Agile accounting software helps finance teams build and automate financial reports to remain in the know about daily net income to current total expenses, helping them service customer needs and broader economic changes.

Customize your profit & loss statements to suit your business operations

Phocas Financial Statements is an example of accounting software that allows a business to apply business intelligence to financial analysis to review your numbers in many ways – or, as we like to refer to it, Phocas Financial Statements brings your financial data to life.

The ubiquitous Profit and Loss statement template can be customized to help your business react faster and be more informed about your financial health. Plus, the accounting software keeps the financial documents in real-time with an automatic, daily refresh from your ERP and other data sources.

A good starting point is to use the template to set-up a P&L statement in the standard business accounting fashion. You can see the revenue, COGS, operating expenses (gross profit margin), other revenue (EBITDA), depreciation and amortization, interest, tax.

Once this is complete, the statement can be viewed by looking at a certain period of time. Many business owners like to review side-by-side data by current, previous and budget period. Other finance teams might like to view results by month or quarters and so this is also possible within Phocas by clicking on the column function.

For others, so many periods of data might not be necessary so you can choose to hide/remove certain periods but the data remains, you can’t lose it.

The profit and loss statement can have many versions, but all line items remain in the system, allowing you to focus on certain aspects that need attention. People can drill down to more detailed expenses or you can add metrics that relate specifically to your business - whether you are a manufacturer, wholesaler or retailer. If you are interested in financial metrics, you might like a version that focuses on sales per day, wages as a percentage of sales and key margins calculations on relevant products like gross profit margin, operating profit margin and EBITDA margin.

You can switch views to look at expenses in more detail and bring them to the forefront of the Profit and Loss statement making it easier to see the critical operating expenses on the statement. Alternatively, you might like to see percentage of company’s revenue mode so each row on the profit and loss is as a percentage of revenue that can be useful for looking at operating expenses and seeing what percentage of revenue they represent.

Finance teams can refine Profit and Loss statements to suit the detail you might need across your divisions. This means everyone with access has built-in flexibility with just a press of a button or the finance team can customize for certain teams, so they only see what’s relevant to them. All users can switch easily between views of profitability by month, quarter, year-on-year so they can have data-driven conversations while interacting with dynamic Profit and Loss statements.

It is vital to have up-to-date and interactive financial statements in the hands of key decision-makers to allow for self-diagnosis of performance challenges. It will enable a business to respond quickly and decisively to emerging challenges and then directly identify the impacts positively or negatively in a fast timeframe.