When it comes to running a business, accurate financial reporting is important. But for construction and manufacturing companies, it’s even more essential. Businesses within these industries face their own unique set of challenges, like dealing with stock and work-in-progress (WIP) for projects, which often become major headaches if you’re not on top of your financial reporting.
Accurate and timely financial reporting is the key to both short and long-term business success. To help you understand how reporting can take your manufacturing or construction business to the next level, below are some important considerations to keep in mind, especially when it comes to stock and WIP.
Stock
Stock can represent a significant component of a business’ assets, especially in the manufacturing industry. Having accurate financial reports helps provide a clear picture of stock value, which helps companies manage inventory levels and make smart purchasing decisions. Timely reporting helps to flag old or slow-selling stock, so businesses can take action to minimise losses and make the most of their working capital. Additionally, properly valuing stock is essential for understanding a company’s profitability and future potential, which can ultimately influence your strategic choices.
Work in Progress
Work in progress (WIP) refers to products or services that are in various stages of production, and are particularly relevant in the construction industry. Precise reporting of WIP helps businesses keep an eye on operational efficiency, identify problem areas or bottlenecks, and streamline their production processes.
Accurate WIP valuation and reporting also helps determine if projects are profitable, and gives insights into how well a company manages costs and achieves desired margins. Plus, accurate WIP reporting is important for compliance with accounting standards, tax rules, and other regulations (like QBCC).
Reporting — The Big Picture
At the end of the day, financial reporting goes beyond just stock and work in progress. And, while it may not always sit at the top of your priority list, here are a few reasons to keep you motivated to stay on top of your reporting game:
- Owner Confidence: Accurate financial reports build trust and confidence among business owners.
- Decision-Making: Reliable financial information helps management make informed choices about allocating resources, expanding, and taking strategic initiatives. When you have accurate, timely data on your business’ operational health, it becomes much easier to confidently make decisions and take action!
- Compliance and Governance: Accurate reporting is crucial for meeting regulatory requirements, promoting good corporate governance, and avoiding legal and reputation risks. At the end of the day, you can’t put a price on peace of mind, and staying on top of your reporting is one way to help you rest easy.
To put it simply: Accurate financial reporting is the foundation of financial stability and success in business. It gives a complete view of your company’s assets, liabilities and performance, making it easier to make smart decisions and boost confidence.
When it comes to measuring asset value and operational efficiency, accurate reporting of stock and WIP is particularly critical. By maintaining high standards in financial reporting, this will not only help you in the short-term, but also ensure you and your business can successfully navigate uncertain times and plan for long-term growth.
We’re Here to Help!
At Hoffman Kelly, we work with business owners to understand the drivers of their business and work with you to achieve sustainable, long-term growth. We understand the unique challenges faced by manufacturing and construction businesses, so contact us today to see how we can help lighten the load of financial reporting!
