Business reports are an integral part of actively managing any company. Management uses the reports to track progress toward its various goals, control expenditures and increase revenue. Business reports help to predict trends, and this is an advantage toward increasing profits. Managers who review the reports on a daily or frequent basis can quickly make adjustments for abnormalities.
Inventory is a major expense for many businesses, especially those that manufacture products or sell merchandise. Although service-oriented businesses have significantly less inventory, they can increase profits by monitoring its usage. Inventory reports inform management of the current cost of materials purchase and maintenance. Materials maintenance includes warehouse or storage unit rental expense and the accompanying labor costs to stock and retrieve the products. Management will know which products are slow movers or have increased in price. Their responses might include putting some merchandise on sale, reducing inventory or finding a lower-cost supplier.
Sales reports help guide the business toward greater profitability. Although many industries have slow or busy trends throughout the year, if a profitable product suddenly decreases in sales, then management can check to see if competitors have lowered prices or added a new offering to that particular line of merchandise. Additionally, sales reports show the success or failure of your advertising campaigns. This information can guide you in future marketing decisions
Business budgets allocate a designated amount of money to each category, i.e. payroll, advertising, transportation, overhead, etc. The monthly budget report enables management to monitor spending and catch any abnormalities. This report is especially useful for avoiding scope creep on projects. Scope creep can eradicate any potential profit if it gets out of control.
All financial transactions result in two or more entries to the business ledger. The ledger must always balance, which means that the dollar amount of credits must equal the dollar amount of debits. Some ledgers have sub-ledgers, and they must also balance. Managers who run daily balance reports will notice discrepancies immediately. This makes it easier to correct the mistake, especially in restaurants and retail businesses that have many transactions every day.
Management uses reports when planning future budgets. They study various reports to learn current and historical trends within the company and its industry. They can see how the company compares to other businesses of similar size within the industry as a whole, or within a specified geographic area. Business reports help managers to predict upcoming trends, so they can adjust inventory, advertising and personnel to meet an expected busy or slow period.