Why Are Financial Statements Important?

Wellington Financial Statements Services

Annual financial statements (year-end accounts) are a compulsory requirement in New Zealand.  However, many business owners fail to see the value in them and often don’t look at them with the right set of eyes.

Business owners find them a hassle to do and often believe they are just another piece of paper that they need to complete. This is however not the case. Financial statements can be a very useful tool to see how your business is doing on a yearly basis.

Let us briefly explain the key points as to why they are important!

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The Top 5 Reasons of the Importance of Financial Statements

  1. They provide a regular measurement for an organisation’s performance and position in a standard format. From these statements, Key Performance Indicators (KPI’s) can be measured against past results, industry standards and general standards to assess areas to address i.e., a shortage of working capital,
  2. If you’re looking to obtain finance either for the business or personally, the bank or other lender is almost certainly going to ask for a set of the latest financials,
  3. The same applies if you’re looking at bringing in an investor into the business. They will want to see the financials to weigh up risk, assess potential return on investment and more,
  4. Shareholders or beneficiaries have rights to see these financials as they have an interest in the organization, and
  5. They provide a basis for your income tax returns and taxation.

How can Affinity Accounting help?

An external accounting expert is required to prepare financial statements. While it is possible to do them yourself, we’ve never seen it been successfully done before! Banks and others won’t accept DIY financials either.

However, the real value comes after we’ve completed the financials and we explain what these numbers mean to you in simple, non-jargon English.