Financial Reports Every Professional Services Firm Should Review Monthly

Professional services firms do not need dozens of reports every month. They do need a small set of reliable reports that tell owners what is happening with profitability, cash, receivables, and the financial position of the business.

Here are five reports worth reviewing regularly.

1. Profit & Loss Statement

The Profit & Loss Statement shows revenue and expenses over a period of time. Review current-month and year-to-date results, and compare them with prior periods when useful. Look for changes in revenue, contractor or payroll costs, software expenses, and other major categories.

2. Balance Sheet

The Balance Sheet shows what the business owns and owes at a point in time. It can reveal old receivables, debt balances, unusual negative accounts, accumulated owner activity, and other issues that a P&L alone will not show.

3. Accounts Receivable Aging

For firms that invoice clients, the accounts receivable aging report shows who owes money and how long invoices have been outstanding. A profitable business can still have a cash-flow problem when customers pay slowly.

4. Profitability by Client or Project

If your accounting setup supports reliable client or project tracking, profitability reporting can help identify which engagements are generating strong margins and which may be consuming more resources than expected.

5. Cash Flow Information

Owners should understand how operating results translate into cash. Depending on the business and accounting method, this may involve a formal cash flow statement as well as reviewing bank balances, receivables, debt payments, and upcoming obligations.

The Reports Are Only as Good as the Books

A report generated by QuickBooks is not automatically reliable. The underlying transactions need to be reviewed, accounts reconciled, and unusual balances resolved.

Blue Walney Bookkeeping & Advisory provides monthly bookkeeping and financial reporting for professional services firms, including consulting, marketing, and IT services businesses.