Why Is the Monthly, Quarterly & Yearly Budget Report Important?

Budget reports are important documents to the financial success of an organization, according to the financial experts at the Principles of Accounting website. To plan for the future or react to pending issues, a business owner needs constant access to financial reporting information. To get the maximum value from a monthly, quarterly or yearly budget report, the business owner needs to understand the individual importance of each document.

Monthly Reports

Monthly budgeting reports include information such as payroll expenses, utilities and other facility overhead costs, monthly revenue and any changes in expenses from month to month. A monthly budget is important because it helps a business owner or executive to see spending trends that could be detrimental to the company and address those trends before they get out of hand. The reports can also allow management to analyze the cost of facilities maintenance and try to find ways to reduce costs from month to month.

Quarterly Reports

Quarterly reports are often how businesses compare their progress from year to year. The budget report from the first quarter of the current year gets compared to the report of the first quarter of the previous year to gauge progress. Managers can identify areas where the company has experienced financial issues from one year to the next, and then address those issues prior to the second quarter's budget report coming out. A quarterly budget report can also be used to mark the progress of special projects such as capital investments or an ongoing sales contract to see how they're affecting the business.

Yearly Reports

Yearly budget reports help to show how annual purchase agreements for materials services such as shipping or manufacturing affected the company's bottom line. When you use a yearly budget report to compare the performance of the company from year to year, you can get a general idea of how revenue changed over the course of the year, and you can use those numbers to help budget for the coming year.

Combined

The financial health of a company is measured through its monthly, quarterly and yearly reports. The yearly report can give a detailed overview of the company's performance from the previous year, and the quarterly budget reports can help fill in the details on how the performance fluctuated. The monthly reports can then add some clarity to the quarterly reports. When used in concert, budgeting reports can be an invaluable way for a business owner to monitor the financial health of her business.