Critical to the success of any small to mid-sized business is financial stability. As a business owner, you should be able to discern which indicators determine financial stability and which indicators warn of financial challenges ahead. All of this information can be gathered from regular reviews of your financial and operational reports. Both contain key data and information that business owners need to know, but these reports serve different purposes.
Financial reports track how much money your business is making and how you are spending that money, as of a specific period in time. As a business owner, you obviously want to know this information. However, there are additional stakeholders or potential stakeholders that may need to know this information as well, such as investors or creditors. Examples of various financial reports are a balance sheet (which summarizes a company’s assets and liabilities), an income statement (which indicates how much profit a company generates), and a cash flow statement (which shows a company’s sources and uses of cash). Financial reports show historical data, but they provide insight into how a business spends its profits, whether they are reinvested into the business, and whether the company can sustain future growth.
Operational reports provide business intelligence on how efficiently a company performs. These reports allow companies to evaluate its current and future financial situation. With the correct systems and tools in place, operational data can be tracked real-time so that businesses are able to react and adjust their practices effectively. Business owners should review operational reports daily. These reports can vary by industry. Restaurants may need to track average time per table/meal, whereas hotels may need to track occupancy rates. Actions taken by business owners resulting from this garnered business intelligence can have an immediate, dramatic impact on productivity and ultimately profitability.
As a small or mid-sized business owner, keeping tabs on both your financial and operational reports will help you run your business more effectively. We are currently offering a free analysis of your business processes and accounting system, which could help you to better prepare and understand your financial and operational reports. If you would like to learn more on how Analytix Solutions can help move your business forward, please call me directly at 781.503.9002 or email me at sales@analytix.com.
Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.
Written by
Analytix Editorial Team
FAQs
Financial reports show historical data, but they provide insight into how a business spends its profits, whether they are reinvested into the business, and whether the company can sustain future growth. Operational reports provide business intelligence on how efficiently a company performs.
What is the difference between financial and operational? ›
The financial department accomplishes this goal by analyzing data and forecasting details about their market. The operations department, however, focuses on measuring the internal success of the company through the allocation of resources or finding and hiring talented employees.
What is the difference between reporting and financial reporting? ›
Financial reporting is the process of tracking, analysing and reporting your company's financials. Reporting focuses on surveying the information you've gained through accounting processes. This analysis enables your business to assess your financial position, evaluate past performance and forecast future performance.
What is an operational report? ›
Operational reports provide real-time operational data analytics and insights for fast-paced businesses and industries. Such reports represent numbers, trends, and statistics in the form of a dynamic display that can be accessed by executives and managers.
What is the difference between management reports and financial reports? ›
Financial reporting focuses on a company's overall financial performance. Management reporting looks at specific areas of the business in both operational and financial terms. Past or future? Financial reporting looks at how your company has performed financially in the past weeks, months and years.
What is financial and operational analysis? ›
What is Analyzing Operational and Financial Performance? Analyzing Operational and Financial Performance is essentially about converting management data that your project has collected into useful information. You can then use this information to make management decisions and inform your future actions.
What is the difference between operational plan and financial plan? ›
Another difference between the two is the time frame of the planning. Financial planning is typically focused on the long term, with plans covering a period of several years. Operational planning, on the other hand, is typically focused on the short to medium term, with plans covering a period of months or quarters.
What are the two types of financial reports? ›
The three main types of financial statements are the balance sheet, the income statement, and the cash flow statement. These three statements together show the assets and liabilities of a business, its revenues, and costs, as well as its cash flows from operating, investing, and financing activities.
What are the three types of financial reports? ›
The income statement, balance sheet, and statement of cash flows are required financial statements. These three statements are informative tools that traders can use to analyze a company's financial strength and provide a quick picture of a company's financial health and underlying value.
What is considered a financial report? ›
Financial reporting — the communication of financial information to external and internal stakeholders — is most often achieved by the "core" financial statements: balance sheet, income statement and statement of cash flows. But it can also come in many other forms, depending on the information needs of the reader.
Businesses use operational reports to track performance, make informed decisions and improve operational processes. The four main types of operations reports include real-time, periodic, historical trends predictive analytics and adhoc reports.
What are examples of operational? ›
Examples of operational in a Sentence
The new airport should be fully operational by next year. The computer network is now operational. These examples are programmatically compiled from various online sources to illustrate current usage of the word 'operational.
What is the difference between management and financial statements? ›
Financial accounting looks at the entire business while managerial accounting reports at a more detailed level. Managerial accounting focuses on detailed reports like profits by product, product line, customer and geographic region.
What is the difference between management statements and financial statements? ›
Past and Present Use
A financial statement contains data for a defined period of time. Managerial accounting looks at past performance but also creates business forecasts. Business decisions are informed by this type of accounting. Investors and creditors often use financial statements to create forecasts of their own.
What is operations and finance? ›
Financial operations management refers to the process of overseeing the various functions of a business's financial activities. All businesses engage in financial activity, which is based on the concept of transactions.
Which is better, finance or operations? ›
Ans: This depends on your interests. Finance is a good choice if you enjoy the challenge of analysing financial data, managing risk, and making strategic financial decisions. Operations Management is better if you prefer problem-solving, data analysis, and optimising business processes.
What is the difference between financial debt and operational debt? ›
Explaining the test, the court opined that if the creditor is claiming the debt from the corporate debtor for rendering the 'service', then the debt would be considered an operational debt, however, when the debt is disbursed for the time value of value having the commercial effect of borrowing, then the debt would be ...
What does operations mean in financial? ›
Transactions are one of the basic functions of business, as goods and services are exchanged for currency or cash. How a business processes, records, and otherwise administers its transactions is referred to in the broad sense as financial operations.
