External Financial Reporting: The Business of Accountability

Financial planning and reporting aren’t just an internal necessity, it’s also crucial for keeping your business accountable to current investors and shareholders and can recruit other potential stakeholders.

Many laws and regulations are already in place that require certain types of companies and entities to publish financial reports publicly, such as trading companies and those dealing with stock market exchanges. However, even smaller entities like family foundations and trusts or non-profit organizations are required to make many of their financial documents open to the public.

First and foremost, this external reporting holds you, as a business owner, accountable. Many shareholders have invested in your company, and sharing critical financial documents shows these shareholders that their investment was a good one. It means that your financial health, good or bad, is visible and known by other entities who have a say in your successes or losses.

Secondly, this documentation also invites others to view your business’ success in evaluating whether to work with your company. This can be massively beneficial, as it can draw in potential talent and investments that can further grow your business.

From a management perspective, this external reporting can also be critical for understanding how your business is running compared to others in your sector and can help you to make more informed and guided decisions regarding your finances. For example, financial analysts can look at the expenditures, losses, profits, and assets of your company compared to another, and decide where you can direct your attention most to meet or surpass industry standards.

Internal financial recordkeeping is critical for having a thorough understanding of your company’s financial health, but sharing these documents and audited statements externally broadens your business as a whole. While the thought of sharing potentially low profits or high losses with external investors may seem risky or overwhelming initially, it proves to be a critical way to inform your financial planning process and make the best choices for your company’s success.

Strategic iQ is committed to helping clients achieve their professional goals through intentional planning and decision-making. Utilizing the tracking and analytical programs a financial planner has under their belt can upgrade your sales strategy and lead to greater profits in the long run.