What Financial Reports Should a Business Review Every Month?

Many business owners focus on their bank balance to understand how their business is performing. While this tells you how much cash is available today, it doesn’t tell you whether the business is profitable, whether costs are increasing, or whether customers are paying on time.

To properly understand financial performance, businesses should review a small set of key financial reports every month. These reports provide the clarity needed to make informed decisions and keep the business financially healthy.

In this post we’ll explain the five financial reports every business should review each month.

What Financial Reports Should a Business Review Each Month?

Most businesses should review five key financial reports every month:

1. Profit and Loss Statement (P&L) – shows whether the business is making a profit.
2. Balance Sheet – shows the financial position of the business.
3. Cashflow Overview – shows how money moves in and out of the business.
4. Aged Debtors Report – shows which customers still owe money.
5. Key Performance Indicators (KPIs) – highlights the most important business metrics.

Together, these reports provide a clear overview of financial performance.

Why Monthly Financial Reporting Matters

Waiting until the end of the financial year to review the numbers can create problems. By that point, the information may be months out of date, making it harder to correct issues.

Reviewing financial reports monthly allows business owners to:

• Understand whether the business is profitable
• Identify rising costs early
• Stay on top of unpaid invoices
• Monitor cashflow
• Make better financial decisions

In short, monthly reporting provides visibility and control over the business’s finances.

The 5 Financial Reports Every Business Should Review

1. Profit and Loss Statement (P&L) - The Profit and Loss statement shows how much money the business has earned and spent over a period of time.

It typically includes:

• Revenue (sales income)
• Cost of sales
• Expenses
• Net profit

Reviewing the P&L monthly helps business owners understand whether the business is profitable and how performance is changing over time.

2. Balance Sheet

The balance sheet provides a snapshot of the company’s financial position.

It shows:

• Assets – what the business owns
• Liabilities – what the business owes
• Equity – the value of the business

While the P&L shows performance over time, the balance sheet shows the overall financial health of the company.

3. Cashflow Overview

Cashflow tracks how money moves in and out of the business. Even profitable businesses can run into trouble if they don’t have enough cash available to pay suppliers, staff, or tax bills. Monitoring cashflow helps businesses ensure they have sufficient funds to operate smoothly.

4. Aged Debtors Report

The aged debtors report shows which customers owe money and how long invoices have been outstanding.

Invoices are usually grouped into time brackets such as:

• Current
• 30 days overdue
• 60 days overdue
• 90+ days overdue

If customers are paying slowly, it can cause cashflow pressure. Reviewing this report monthly helps businesses stay on top of unpaid invoices.

5. Key Performance Indicators (KPIs)

KPIs highlight the most important numbers that measure business performance.

Examples include:

• Revenue growth
• Profit margins
• Cash reserves
• Debtor days

Tracking KPIs helps business owners quickly understand whether the business is moving in the right direction.

You can learn more in our guide: What Are KPIs?

Final Thoughts

Financial reports are not just something businesses review at year end for tax purposes. When reviewed monthly, they provide valuable insights into how the business is performing.

By regularly reviewing the profit and loss statement, balance sheet, cashflow, aged debtors, and KPIs, business owners gain the clarity needed to make informed decisions and manage their finances effectively.