Financial reporting services
in the Philippines
Detailed financial statements, clean financial reports, and key financial ratios for your PH business
Financial Reporting - The Process
Financial Reporting - The Output
Financial Reporting in the Philippines:
Essential for Business Growth!
Understand Your Company’s Financial Health
A company’s finances are the oxygen that keeps the business alive!
Through a provider of financial reporting services, a company in the Philippines can get a clear picture of the financial position of its entire business. When you work with a financial reporting service provider, you would be able to receive value-added financial reports from online accountants on a regular and consistent basis.
Company management must always know how much cash they have in the bank, what monies are owed to creditors, what monies the company is due to receive, and the value of all other assets and liabilities. These pieces of information are all delivered through financial reporting.
Management must ask questions and receive accurate answers on fundamental financial data. What was the real value of my sales and costs during a period? What are my sales margins? What is the value of assets currently under the control of the company? What do I owe my suppliers? Have employee costs risen? Has this financial period been better or worse than the previous financial period? What does our financial future look like?
A financial reporting service is the mechanism to “stitch” all of the above information together and clearly understand how the business is doing from a financial perspective.
If management is not receiving a full suite of financial reports on a regular basis – income statement, P&L account, cash flow statement, and balance sheet – they are effectively driving a car blindfolded.
Business Performance and Financial Analysis
Financial data should always be presented to management in a way that actually makes sense. This enables management to quickly understand business performance and take action quickly where necessary.
The optimal mechanism for presenting financial data is through financial reports because they provide key indicators of the areas where a company is succeeding financially and where a company could be performing better.
By receiving accurate and up-to-date financial reports on a consistent basis, management can monitor financial performance in accordance with key performance indicators (KPIs) for each business function or business segment and identify specific areas or business departments that require further attention. A financial reporting services provider can do all these for you.
A remote accountant from a financial reporting services provider should also include additional financial analysis when they give a value-added financial report. This might include the monitoring of financial KPIs, key financial ratios, budget monitoring, and other forms of financial analysis that might relate to your business model or industry.
In effect, financial reports and the financial data they include provide an invaluable source of business intelligence. If company management is not receiving accurate financial reports regularly, they are missing out on a significant opportunity to leverage important information about their own business to help it grow.
Remember, the financial information required for a financial report already exists and is being generated within the company! What a shame if it isn’t utilized for the benefit of the business!
Informed Strategic and Commercial Decisions
Management will only be in a position to make informed commercial and strategic decisions about the future of a company if they have accurate financial data on which they can rely. This is another key benefit of receiving financial reports for businesses in the Philippines.
When considering big decisions such as capital expenditure, investment opportunities, office expansion, recruitment budgets, etc – management must take into account all financial data generated by the company.
For example, it is not sufficient for a PH business to consider only the Balance Sheet when considering a capital investment – management also needs to understand what cash is coming in and out of the business on a weekly or monthly basis by reviewing the Cash Flow Statement and P&L Account.
Key decisions that can affect a PH business should be made with the most up-to-date and accurate financial information available. This is a fundamental requirement for ensuring that key decisions are as informed as possible. It is the role of the accountant or accounting services provider to ensure they can obtain and provide this financial data to management and provide financial advisory services to management based on this information.
If you are engaging a remote accountant in the Philippines or employing an in-house accounting team, make sure that they are generating and delivering regular financial reporting services and financial advisory services so management can get a clear picture of how the business is performing.
Compliance & Audit
The need to receive financial reports is not only relevant from a commercial and strategic perspective because you also need to consider the important statutory and compliance requirements in the Philippines.
Businesses in the Philippines need to file financial statements at the end of each financial year with the BIR and the SEC as part of the statutory requirements. The financial statements should outline and confirm all the activities and transactions of the company during the previous financial period.
If financial reports are not prepared, monitored, and reviewed throughout the year, it will be very difficult for management to prepare and file accurate financial statements at the end of the year.
In addition, the Philippines tax compliance framework is quite complex and requires companies to file tax returns on a monthly, quarterly, and annual basis. If a company is not generating financial reports on a regular basis, it will be difficult for management, or even for the company’s remote accountants in the Philippines, to know how much tax has to be filed and to maintain a proper record of these tax filings.
Finally, the end-of-year financial statements also need to be audited by an independent auditor in the Philippines. If a company has been generating and reviewing financial reports on a monthly basis throughout the year, it will have a much better understanding of its finances and compliance on an ongoing basis. This will then make the end-of-year audit a much more efficient process to complete.
Shareholders and Investors
Shareholders and investors in a company will always want to understand the financial performance of the business in which they have invested.
Sure, company management might be able to meet with shareholders and explain how the company is performing. However, if there are no financial reports and no data to support the claims of management, it is difficult for investors or shareholders to rely fully on the management’s perspective.
Any business with shareholders who are invested in the future of the company will generally demand to receive financial reporting services on a monthly basis. In fact, the requirement to generate and present financial reports will usually be an important term of the initial Shareholders Agreement.
By receiving regular financial reporting services that can deliver value-added financial reports on a regular basis, company management can benefit from receiving key financial information that they can simply pass on to investors and shareholders at predetermined intervals. This ensures that shareholders and investors are kept up to date at all times on all financial aspects of the business.
Finally, if you are a growing company, you may be considering future investors. A potential investor will always want to understand the financial position and financial prospects of the target company. Without regular and detailed financial reporting, it will be difficult to provide a potential investor with key financial data.
Investment and Due Diligence
When a company is seeking to raise investment monies or looking to apply for a bank loan, the lender or investor will want to first understand the financial status of the business.
They will usually request access to the financial reports of the company over a historic period of time. If the company is unable to produce full financial reports – i.e. Income Statement, Cash Flow Statement, P&L Accounts, and a Balance Sheet, this can raise two red flags!
Not only will the lender or investors not have financial data that will support the financial viability of the business, but the lack of historic financial reports can also be a key indicator that there is an issue of concern with the finances or the management of the business. This can lead to a failure of a potential investment deal.
Financial reports are generally one of the most important elements of the due diligence process. So, make sure your company is availing of value-added financial reporting services in the Philippines which helps ensure you are always receiving financial reports that are up-to-date and accurate!