Financial reporting is a must-do preparation for the upcoming year. Here’s how to ensure you complete it once your fiscal year ends and help you do the business moves you want.
Now is a natural time to plan your strategic goals for the coming annual cycle. But to create a targeted growth plan, you need detailed insight into your current financial position. Without internal examination, it’s hard to pinpoint the minute metrics that may help you meet your future projections. To put it simply, preparing your financial reporting isn’t a task to take lightly.
Have you ever tried to craft a strategic business plan based on a hodgepodge of mixed metrics? If so, then you know that disordered books can derail decision-making. This is especially true for companies that scaled up over the past year. Key information can easily fall through the cracks when the end-of-year report isn’t in order.
Of course, chronic and widespread staff shortages may have left you without the internal expertise needed to prepare a comprehensive report. Unfortunately, this places your company at a disadvantage.
Your future success depends on how well leaders can guide the company. This requires a detailed annual business report. Better planning and strategic operational decision-making should be goals for the coming year. So, it’s critical to prepare reporting now.
Looking Ahead: What’s the Sentiment?
Financial reporting is inherently a retrospective activity. But in its essence, the effort of combing through extensive reporting is actually forward-looking.
Your annual business report holds all the hidden pain points and growth areas that could propel your business forward. It’s true that the document may give you insight into your company’s performance in the past year. But it can also help you prepare an informed financial strategy for the coming year.
External market forces will play a large part in the future success or failure of your financial strategy. So, end-of-year financial reporting should be reviewed in concert with an expert trend analysis of the market as a whole. Otherwise, your planning will be based on only half of the true equation.
Ideally, you should consider reviewing your annual business report with your banker. Your banker will be able to answer some of the key questions you probably have regarding the report. But their value doesn’t stop there. In fact, your banking partner will make the most important contribution through detailed and extensive research regarding potential future market trends.
It would be wise to then cross-reference this external information with the internal analysis in your company’s financial reporting. By doing so, you’ll come up with the best strategic approach for the new year.
Let’s look at some of the leading broad trends and predictions for the year ahead.
Reviewing Economic Trends for 2024
In early 2023, the general economic outlook was gloomy. Talk of an impending recession was widespread, and businesses across sectors were preparing for the worst. But in the intervening months, projections for 2024 have lightened up significantly. The growing consensus is trending more toward the highly anticipated “soft landing” that the Federal Reserve was aiming for. Not the potential recession that everyone feared.
Of course, it’s important to note that the volatile ups and downs of the economy can never be assured. But the current emerging opinions on the economy suggest a brighter outlook now.
For example, a recent PwC Pulse Survey asked executives what economic conditions they expect to encounter over the next few years. What they found largely suggested more positive projections from business leadership.
Just 17% of surveyed executives believed a recession would occur in the next six months, compared to 35% in October of 2022. What’s more, executives are still wary of the same general business threats they cited in 2022, such as cyber-attacks, uncertain economic conditions, and labor acquisition. But a smaller portion said they thought of these challenges as direct threats to their company.
Finally, 27% of executives indicated that they want to integrate new technologies. And 24% of executives are focused on finding new revenue streams. Based on these findings, it seems that a significant portion of executives expect conditions to be good for growth.
Now What? Preparing for Financial Reporting Decisions in the Coming Year
It’s important to understand the general economic trends you face as you wrap up 2023. But it’s perhaps even more critical that you have a strong grasp on your industry-specific trends moving into 2024.
In general, you may want to base your preparation on the information your banker is able to provide. They can compound research regarding the market forces that are likely to come into play over the course of the year. You can then factor these projections into your company’s long-term goals and short-term objectives. This will show what your focus should be in the near term.
The information you gather from your banker can be invaluable, specifically when determining where to allocate resources. For instance, if your banker finds that your company has a surplus of investment funds or high credit availability, you may be ideally positioned to enter a new market in 2024. Or if you’re in an oversaturated market, you could use your surplus funds to acquire a competitor.
Of course, it could be that neither of these moves aligns with your long-term goals. Or maybe your surplus isn’t sufficient to cover these investments. Then, you may want to look into the potential return on investment (ROI) of technology upgrades or increased staffing.
Say your market is in high demand, or you’ve already acquired the majority of your potential customer base. Then, it may be time to think about growing your product line. This way, you can find new customer bases and expand your revenue streams.
Finally, if you’re in a high-risk line of business, you could allocate surplus resources to insurance, disaster recovery, or cybersecurity. Similarly, if you’re struggling with debt, now might be the time to begin to pay down your highest-interest loans.
How To Get Started on Your 2024 Financial Reporting Goals
The only way to achieve your goals for 2024 is to plan. The quality of your financial plan will determine how successful you are by the end of the year. Barring any unexpected events, of course.
The idea of choosing your objectives and approaches for the next year might seem overwhelming around this time. But the reality is that a well-researched and thorough strategy will allow you to move forward confidently.
But suppose your objectives don’t align with the financial information provided by your banker. You then have the chance to adjust to a more practical plan. Not to mention the fact that in the case of a misalignment, you’ve dodged a potentially disastrous strategy. In this way, you can make more precise and targeted decisions.
As a result of this improved decision-making capacity of your leadership team, you’ll likely see better outcomes. In addition, the granular insights that comprehensive financial reporting can garner let you take a more intensive approach to increasing efficiency. This more detailed approach carries significant potential to reduce operational costs and improve individual product ROIs.
It’s now possible to create detailed, bold, yet practical goals. What’s more, the goals are specifically tied to the metrics laid out in your financial reporting. So, you already have a blueprint for where resources and focus should be allocated.
If you’re ready to start the financial reporting process now, the first step is to speak to your banking partner.
Consider a Banking Partner for Your Reporting Needs
Many companies approach financial reporting as a tiresome end-of-year duty. They may not see the effort as an exciting opportunity to take bold steps into the following year. Needless to say, this is their mistake.
It’s a good idea to analyze both your internal annual business report from 2023 and the market trends that are likely to shape the future. As a result, you can improve your decision-making capacity and subsequent outcomes in 2024.
To make these strides in your reporting process, you’ll need a reliable banking partner. It can be hard to find this level of skill and knowledge in the current labor market. But the team at Dubuque Bank & Trust, a division of HTLF Bank has the background and body of work to prove their efficacy in this area.
Dubuque Bank & Trust, a division of HTLF Bank's team can provide you with the information you need to turn 2024 into your best year yet. Reach out to speak to a banking partner at Dubuque Bank & Trust, a division of HTLF Bank today.
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