Chapter 7

How to create monthly financial reports

There are dozens of financial reports that you could create. But there are some monthly mainstays that bookkeepers love.

What are financial reports?

These reports may be produced on a monthly basis to keep an eye on the financials.

Balance sheet / Statement of financial position

  • What it tracks: Value of things owned (including cash) versus things owed
  • What it tells you: If the business gained or lost value, and its current financial position

Income statement

  • What it tracks: Money earned vs money spent
  • What it tells you: If you had a profitable month or ran at a loss

Cash flow statement

  • What it tracks: How much cash the business earned
  • What it tells you: This is useful for businesses that sell things on credit because it shows how much spendable money you have.

Aged receivables

  • What it tracks: Who owes you, how much, and when it is (or was) due
  • What it tells you: Which accounts to chase

Aged payables

  • What it tracks: Who you owe, how much, and when it is (or was) due
  • What it tells you: Demands on your cash and any relationship risks you might be facing

Why does it matter?

Taken together, these reports tell you what your business is worth, how profitable it is, and if it has enough money coming in to keep trading.

The results can affect everything from your spending plans to pricing, forecasts, and customer payment terms. And, of course, the year-end versions of these reports show how much income tax you need to pay.

Who creates financial reports?

Monthly reports are traditionally created by a bookkeeper to help keep tabs on the business. The end-of-year reports tend to be created by an accountant, with a view to minimizing tax and setting financial strategies for the year ahead.

How to create financial reports

If you were creating reports manually, here’s what you’d need to do.

  • Balance sheet: Summarize the activity from the assets, liabilities and equity accounts.
  • Income statement: Summarize activity from the income and expenses accounts.
  • Cash flow statement: Show how much actual cash was available throughout the period.
  • Aged receivables: Show which of your sales invoices have yet to be paid. For any that are overdue, show how many days you’ve been waiting.
  • Aged payables: Show which of your bills you are yet to pay. For any that are overdue, show how many days the supplier has been waiting.

Modern monthly financial reporting

Bookkeeping software has made it possible for anyone to generate these reports at the press of a button. However, you first need to make sure all the numbers have been entered, coded to the correct account, and reconciled.

Some of these reports can be shown on a live dashboard in real time, which updates every day.

The year-end reports are generally prepared by an accountant, who may make some final adjustments to ensure the business doesn’t pay more tax than required.


Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

How to do bookkeeping

Bookkeeping includes everything from basic data entry to tax prep. Let’s look at the core jobs and see how they’re done.

  1. How to do bookkeeping

    Small businesses can do their own bookkeeping or outsource to professionals. We look at how to find a good balance.

  2. Setting up a chart of accounts

    Stepping up to do the bookkeeping in a new business? You may have to set up the chart of accounts. Let’s look at how.

  3. How to do bookkeeping data entry

    Data entry is the foundation of bookkeeping. Enter the numbers right and you’ll learn exactly how the business is doing.

  4. How to do bank reconciliation

    Humans aren’t always perfect at punching numbers. Bank reconciliation is a way to do quality control on your books.

  5. How to manage accounts receivable

    Many businesses issue invoices, and those invoices need to be tracked. Learn how to manage accounts receivable.

  6. How to manage accounts payable

    Paying bills isn’t glamorous. But they’re debts and need to be dealt with. Let’s look at how to manage accounts payable.

  7. Creating monthly financial reports

    There are dozens of financial reports that you could create. But there are some monthly mainstays that bookkeepers love.

  8. How to do payroll

    If all you had to do was pay staff, it would be easy. But there’s more to it than that. Let’s look at how to do payroll.

  9. How to prepare tax returns

    Tax returns can be hard for small business owners. There are deadlines to make, and rules to follow. Let’s take a look.

  10. Using bookkeeping software

    Whether you do a lot of your own bookkeeping or outsource it all, software can help you save your time and budget.

  11. Using professional bookkeeping services

    If you don’t have the time or confidence to take on bookkeeping, a professional can help. Let’s look at what they do.

Download the guide on how to do bookkeeping

Learn about the eight core bookkeeping jobs, from data entry to reporting and tax prep. Fill out the form to receive the guide as a PDF.

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