Every growing business grasps the need for financial accounting services to help manage your money. After all, you’d have no idea what you can invest, spend, or even how to set prices if you didn’t have records of your cash flow, cash burn rate, and income.
But financial statements, especially your annual financial report, are important for other reasons, too. A number of people have a vested interest in finding out how well your company is doing.
It’s important to follow financial accounting standards when preparing an annual financial report so that people with a basic knowledge of business and economics can follow them and draw reasonable conclusions about your company’s past, present, and future.
Who May Read Your Annual Financial Report?
- Potential stockholders and other members of the general public (if yours is a publicly-held company)
- Your board of directors
- Upper-level management who may review and analyze your company financial records to help make decisions about the company’s future
- Employees who might be making collective bargaining agreements or even discussing compensation and bonuses
- Labor unions
- Prospective investors
- Banks and other lending companies
- Vendors extending credit (such as Net-30 or Net-60) terms to your company
- Your tax accountant
- The IRS and other government services that may be interested in reviewing your company financial records for accuracy
- Members of the media who may be covering your company