1. General ledger
The general ledger is the foundation your accounting books. If your accounting software does not have a general ledger, you must manually create one as it helps with:
- Organizing business transactions
- Reporting real financial data
- Balancing their books
- Preparing for audits
- Applying for business loans
2. Balance sheet
As the first of the three main financial reports, the balance sheet is a must-have report. It shows you the stability of your finances. For example, if you want to know if you’re under- or over-spending, you want to be able to access the information on the balance sheet quickly. If you want to redetermine your pricing or marketing strategy, this is the report to create.
3. Profit and loss statement
The second main financial report is the profit and loss statement (P&L), or the income statement. As you track financial information, this report helps you see if you are turning a profit or losing money.
Do you plan out budgets? What about looking to determine the success or failure of your budgets? If so, you want to be able to generate the P&L statement with ease.
You also should also keep an eye on this report throughout the year. Why? If you run into any financial problems, you can use the profit and loss statement to identify and address the issue before it snowballs.
4. Cash flow statement
The cash flow statement (aka statement of cash flows), tells you about how much money is coming in and leaving your business.
Cash flow statements lets you easily see if you have a positive or negative cash flow. If you see negative cash flow, check to see if there are any unpaid invoices that could be collected to bring in more cash.
5. Accounts receivable aging
The accounts receivable (AR) aging report helps you track outstanding balances owed to you.
The AR aging report lets you see the:
- Customer or client name
- Total balance for each customer or client
- Current amount due
- Days past due (e.g., 61-90 days)
- Totals for each column
Use the report to forecast cash flow, estimate bad debt, and stay on top of collections.
6. Accounts payable aging
Contrasting the AR aging report is the accounts payable (AP) aging report. So, why do you need this report in your accounting software? Because it helps you identify why you may have positive cash flow that may be too high. And, you can use it to see how much you owe to your vendors.
Tracking how much money you owe helps you:
- Plan future expenses
- Build a budget
- Manage cash flow
- Decide which debt(s) to pay first
- Stay on top of payments
Use the AP aging report to set up reminders for you to process payments to your vendors.
7. Check register
A check register report records the check and cash transactions you have during the accounting period. Use the report to view and calculate the running balance of your checking accounts to better understand your financial situation.
With the check register report, you can readily access up-to-date information to help guide you through financial decisions. And, other benefits of the check register include helping to:
- Stay organized financially
- Improve budgeting
- Avoid overspending
- See accurate balances
- Track spending
- Locate and resolve mistakes
- Reconcile bank statements
Look for an accounting software program that allows you to easily and securely connect you banking information and generate the report.
8. Invoicing reports
Most accounting software should include invoicing reports. But, double-check to see if your software can create reports like:
- Estimate details
- Invoice details
- Unpaid invoices
- Customer payment history
Choose software that lets you see a quick snapshot of all invoicing information. For example, use invoice reports to see when clients last paid you, how much, and if their account is current.