You don’t need to be an accountant to use financial reports. You need three of them, read once a month, with a few questions in mind.

1. Profit and loss

What it tells you: whether the business made money over a period — revenue minus expenses.

Questions to ask:

  • Is revenue up or down compared with last month and the same month last year?
  • Which expense lines grew faster than revenue?
  • Is there anything here I don’t recognize?

A profit and loss statement is only meaningful if the books are reconciled. Unreconciled books often show profits that aren’t real, or hide expenses that are.

2. Balance sheet

What it tells you: what the business owns and owes at a point in time.

Questions to ask:

  • How much cash do we have, and how much of it is really ours? (GST/HST collected and payroll deductions are held for the government.)
  • What do we owe, and when is it due?
  • Is the shareholder loan or owner equity account moving the way I expect?

3. Accounts receivable aging

What it tells you: who owes you money, and for how long.

Questions to ask:

  • Which invoices are past 30, 60 or 90 days?
  • Is one client consistently late?
  • Do my payment terms match how I actually get paid?

Late receivables are one of the most common reasons a profitable business still feels short of cash.

Make it a habit

Fifteen minutes a month with these three reports — ideally with a short written summary from your bookkeeper — gives you a clearer picture than most business owners have. Decisions get easier when you aren’t guessing.

This article is general information, not financial advice for your specific situation.