Know Your Numbers: The Reports Every Business Owner Should Review Monthly

Once your books are up to date each month, the next step is knowing what to look at. A pile of reports won’t help if you don’t know what matters—and what it’s trying to tell you.

Here are the core reports every small business owner should review monthly—and what each one can reveal.

📄 1. Profit & Loss Statement (P&L)

What it shows: Your income, expenses, and net profit over a specific period (usually monthly or year-to-date).

Why it matters:

The P&L shows whether you're actually making money. It helps you spot:

·      Revenue trends

·      Expense categories growing too fast

·      Seasonal patterns in sales or costs

Tip: Compare this month to last month and to the same month last year. Are you trending the right direction?

💰 2. Balance Sheet

What it shows: A snapshot of your assets, liabilities, and equity.

Why it matters:

It’s easy to focus only on revenue and expenses, but your balance sheet tells you about your overall financial health. It shows:

·      How much cash you have

·      What your business owns (assets)

·      What you owe (liabilities)

Pay attention to your cash balance, credit card/payable balances, and any unusual spikes.

💵 3. Accounts Receivable Aging Report

What it shows: Who owes you money and how long it’s been outstanding.

Why it matters:

A big sales month means nothing if clients don’t pay. This report shows:

·      Which clients are consistently late

·      Where follow-ups or policy changes are needed

·      Potential cash flow issues ahead

🧾 4. Accounts Payable Aging Report

What it shows: What bills you owe and when they’re due.

Why it matters:

Helps you manage cash flow, avoid late fees, and take advantage of early-pay discounts. Also flags vendors who might need clearer terms or documentation.

📊 5. Cash Flow Summary

What it shows: How cash moved in and out of your business during the month.

Why it matters:

You can be profitable on paper and still run out of money. This report shows the real-time heartbeat of your business: when money comes in, when it goes out, and where it actually lands.

Bottom Line

You don’t need to become a financial analyst—but understanding these key reports will give you sharper insight into your business and better control over your decisions.

Next week, we’ll dig into one of the biggest pain points for growing businesses: how to manage client payments and prevent cash flow gaps.