As a small business owner, you’re not just the visionary — you’re often the operator, marketer, and financial manager too. But no matter how many roles you juggle, reviewing your financial reports each month should be non-negotiable.
Why? Because your financial reports tell the real story of your business. They reveal what’s working, what’s draining resources, and what needs your immediate attention. Reviewing the right reports helps you make informed decisions, avoid cash crunches, and ultimately grow your business with confidence.
In this blog, we’ll break down the essential financial reports every small business owner should review on a monthly basis — even if you have a bookkeeper or accountant managing your numbers.
1. Profit and Loss Statement (P&L)
Also known as the income statement, the profit and loss statement shows your revenue, costs, and expenses over a specific time period — typically a month.
Why it matters:
It helps you understand whether your business is actually making money. You’ll see how your revenue compares to expenses, what your gross and net profit margins are, and whether you’re trending up or down over time.
What to look for each month:
- Is your revenue growing, stable, or declining?
- Are any expenses unusually high?
- Are your profit margins healthy and sustainable?
If your profit is decreasing or your expenses are creeping up, this report will be the first to show it.
2. Balance Sheet
The balance sheet provides a snapshot of your company’s financial health at a single point in time. It lists your assets (what you own), liabilities (what you owe), and equity (what’s left for the owner).
Why it matters:
While the P&L shows profitability, the balance sheet shows stability. It reveals how much debt you’re carrying, how much cash you have on hand, and how well you’re managing assets like inventory or receivables.
Key areas to review:
- Cash position – Do you have enough liquidity?
- Debt – Is your debt load manageable?
- Owner’s equity – Is your business growing in value?
Monitoring this report monthly helps you keep tabs on long-term sustainability, not just short-term profit.
3. Cash Flow Statement
Cash flow is king — and many profitable businesses have failed simply because they ran out of cash. The cash flow statement shows how money is flowing in and out of your business across operations, investing, and financing.
Why it matters:
You can’t pay bills with profit; you need cash. Reviewing your cash flow monthly helps you spot problems before they become crises.
Watch for:
- Negative cash flow from operations (a warning sign)
- Timing issues with receivables and payables
- Opportunities to better manage spending or payment schedules
A healthy cash flow report helps ensure you can cover payroll, invest in growth, and weather slow periods.
4. Accounts Receivable Aging Report
This report breaks down all the outstanding invoices owed to your business, grouped by how long they’ve been overdue.
Why it matters:
Cash sitting in unpaid invoices can hurt your liquidity. This report helps you identify which clients are behind on payments and need follow-up.
Each month, ask:
- How much money is tied up in receivables?
- Who are your slow-paying clients?
- Are your payment terms working for or against you?
This is essential for improving your collections and avoiding cash shortfalls.
5. Accounts Payable Aging Report
Just like you track what others owe you, you also need to know what you owe — and when.
Why it matters:
Reviewing your accounts payable aging report helps ensure you’re not missing due dates, damaging vendor relationships, or accruing late fees.
Look for:
- Upcoming bills to budget for
- Overdue payments that may hurt credit
- Patterns in recurring expenses you might optimize
Managing this well helps maintain good vendor relationships and keeps your credit strong.
6. Budget vs. Actuals Report
This comparison shows how your actual income and expenses measure up to your monthly or annual budget.
Why it matters:
Budgets are only useful if you track them. This report reveals where you’re over or under-spending, helping you adjust strategies before things go off track.
Key insights:
- Are sales falling short of targets?
- Are marketing or payroll expenses higher than expected?
- Where can you cut back or reallocate resources?
Final Thoughts
You don’t need to be an accountant to understand your business finances — but you do need to review the right reports regularly. By making these six financial reports a part of your monthly routine, you’ll gain better control over your operations, make smarter decisions, and set your business up for sustainable growth.And if these reports still feel overwhelming? You’re not alone. At Executive Financial Partners, our Atlanta accounting consultants help small businesses turn complex financial data into clear, actionable insights. From monthly reporting to fractional CFO services, we tailor financial support to meet you where you are — and help you grow from there.
