A famous quote goes,
“There are no secrets to success. It is the result of preparation, hard work and learning from failure.”
One of the best learning and preparation tools for small businesses is reports.
Not only do they present outcomes from past actions for evaluation, but they also enlighten users (e.g. owners and investors), for proper decision-making.
Types of Financial Reports for Small Businesess
This article focuses on four major financial reports that small businesses in Kenya need.
Regardless of your business size, Bizkit provides you with accurate financial statements to better understand your business.
These are:
1. Sales Report
It is a snapshot of sales activities and can be prepared daily/weekly. Watch every transaction as it rolls in. Keep track of sales from anywhere, including items sold, customer details and order values.
Get daily sales summary reports straight to your mobile phone. No need to go to the shop or call your employees at the end of the day to get these details.
Instantly see what’s selling most for the day and what needs attention. From top-selling products to sold-out products, BizKit lets you know it all.
Match your daily collections by payment method with what’s in your account. Let the BizKit POS system do the balancing for you. No manual calculation. No errors.
Manual reporting includes writing down all transactions and their modes of payment (e.g. cash, m-pesa or card), then calculating the total revenue generated.
While this is useful, modern alternatives such as Point of Sale (POS) software automatically and accurately generate reports since they update statistics in real-time after each wireless sale. We welcome you to read our articles on inventory management and business process automation, which include examples of POS software in Kenya.
With BizKit’s sales performance reports, you’ll always have the data you need to make smarter, data-driven decisions that fuel growth.
2. Income Statement (Profit & Loss)
See how much money your business is making and spending, including sales, costs, and profits, for any period in your P&L statement.
The economic objective of any rational entrepreneur is profit maximization and this is therefore the most important financial report.
Its preparation involves deduction of all business expenses from the sales revenues calculated through aforementioned sales reports. This is useful as it helps in assessing what is or is not working, and making necessary changes, especially when prepared monthly as we recommend.
It is also useful when filing tax returns as it allows accurate calculation of tax payable according to official rates, after factoring in all taxable incomes and allowable expenses. Failure to this attracts penalties from the Kenya Revenue Authority.
3. Balance Sheet
It shows the business’ assets vis-à-vis its liabilities.
Get a clear view of what your business owns (assets), owes (liabilities), and its overall value (equity).
Assets generate future benefits and could be short-term such as cash-in-hand and debtor accounts, or long-term such as land and equipment.
Liabilities generate future obligations and could be short-term such as outstanding expenses and creditor accounts, or long-term such as mortgages.
The positive difference between total assets and liabilities is equity, which represents how much the owner claims in the enterprise. Small businesses in Kenya can use such information when pitching to investors or applying for loans from institutions.
4. Cash Flow Statement (CFS)
Liquidity/cash availability is important for several business processes such as purchases and debt repayments. The CFS tracks changes in amounts of cash and cash equivalents throughout operating, investing and financing activities.
Ensure your accounts are accurate and well-organized.
It is complementary to but different from other reports because it focuses on cash presently held, not including future incoming/outgoing cash recorded on debit/credit.
Most cash flows come from operating activities, which are mostly sales. Such can easily be monitored and reported by POS software. Investing activities include transfers of equipment and other assets, while financing activities are cash receipts/payments involving investors and other financiers.
Gain a clear picture of your business performance
Access your financial statements for your business at any time on your BizKit account.
Gauge your financial health in an instance
With BizKit POS, you can clearly see whether the business is making a profit or incurring a loss. Understand the flow of income and where costs are incurred.
Make informed decisions
Use historical data to plan future financial goals. Evaluate whether to expand, acquire assets, or adjust operations.
Secure business loans and funding
Present financial data from BizKit to show business viability and growth potential. Provide evidence of stability and repayment capacity to lenders to get loans.
Ensure compliance
Satisfy tax authorities with accurate reporting. Simplify the auditing process with detailed financial records.
Manage cash flow
Identify periods of surplus or deficit to maintain liquidity. Prevent over-investment in stock or equipment without adequate cash reserves.
Identify trends
Recognize what drives sales and profitability. Pinpoint areas where costs are rising or revenues are declining.
Run your business like a pro
BizKit’s financial statements empower you with data-driven insights to make informed decisions, secure loans, and manage your business strategically.
BizKit accounting statements make it easy to know exactly how your business is performing.
With our straightforward dashboard and reports, you’ll never wonder if your business is profitable or a loss. Plus, they’re detailed enough and easy to understand.