5 steps to prepare internal financial reports with free downloadable templates

Effective financial management is a key factor in determining the success of a business in today's competitive business environment. Internal financial reports play an important role in providing accurate and timely information to help managers make informed decisions. In this article, 1C Vietnam will provide detailed instructions on how to prepare effective internal financial reports along with report templates that comply with current regulations in Vietnam.

1. What is internal financial reporting?

Internal financial reports are a set of financial reports specifically designed to serve the internal management purposes of an enterprise. Unlike official financial reports that must strictly comply with state regulations, internal financial reports can be flexibly customized to meet the specific needs of each enterprise.

The role of internal financial reporting in corporate governance includes:

• Provide detailed and timely financial information to support strategic decision making.
• Helps effectively control costs incurred during operations.
• Support cash flow management, ensuring liquidity for businesses.
• Evaluate the performance of each department and division in the enterprise.

For small and medium enterprises in Vietnam, internal financial reporting is especially important in controlling costs, optimizing resources and improving competitiveness in the context of limited capital and resources.

2. Benefits of internal financial reporting

Building and maintaining an internal financial reporting system brings many practical benefits to businesses:

• Improve financial management efficiency: Internal financial reports help business leaders accurately grasp the financial situation, thereby being able to adjust financial plans promptly and effectively.
• Support strategic decision making: Actual financial figures from internal reports provide a solid database for short-term and long-term business strategy planning.
• Effective cost control: Through detailed analysis of expenses, businesses can identify and cut unnecessary costs, optimizing the efficiency of resource use.
• Early detection of financial problems: Regular internal financial reporting helps detect early signs of financial irregularities, thereby taking timely remedial measures.
• Minimize legal and audit risks: A well-organized internal financial reporting system will support the preparation of formal financial statements, minimizing errors and audit risks.

3. Common types of internal financial reports

Depending on the specific business and management needs, enterprises can build many different types of internal financial reports . Below are the common types of reports:

• Internal business performance report: Provides detailed information on the business's revenue, expenses and profits over a period of time (day, week, month, quarter). This report helps managers evaluate business performance, compare it with the plan and make necessary adjustments.
• Internal cash flow statement: Tracks in detail the cash flows in and out of the business from business, investing and financing activities. This report is especially important in liquidity management, ensuring that the business always has enough cash to maintain operations and carry out investment plans.
• Balance sheet: Reflects the overall assets and capital at a given point in time. From there, businesses can assess their financial situation, capital structure and debt repayment ability.

4. Internal financial reporting process

To prepare effective internal financial reports , businesses need to follow a strict and scientific process. Below are the basic steps in the internal financial reporting process:

Step 1: Collect data

This is the first and most important step in the reporting process. The data to be collected includes:

• Original accounting documents (invoices, receipts, payment vouchers, contracts...)
• Detailed and summary accounting books
• Reports from relevant departments
• Data from accounting and business management software

Step 2: Classify and process data

Once collected, the data needs to be classified and processed:

• Check the accuracy and completeness of the data
• Classify data into groups that suit reporting requirements
• Eliminate irrelevant or redundant information

Step 3: Analyze the information

Based on the processed data, conduct analysis to draw useful information:

• Calculate key financial ratios
• Compare with plan, with previous period or with competitors
• Identify trends and unusual fluctuations to note

Step 4: Present the report

The information after analysis needs to be presented clearly and easily understood:

• Choose the appropriate presentation format (table, graph, chart...)
• Arrange information in order of priority, from overview to detail
• Use simple, clear language

Step 5: Evaluate and Adjust

After completing the report, there needs to be an evaluation and adjustment step:

• Check the accuracy of the data
• Ensure reporting meets objectives
• Regularly adjust to make reports more complete and effective

During the reporting process, businesses can use support tools such as:

• Microsoft Excel: A popular, flexible tool for calculating, analyzing, and presenting reports
• Accounting software: 1C:Finance & Accounting
• Advanced data analysis tools: Power BI, Tableau...

An important note in the process of preparing internal financial reports is to ensure the accuracy of data and information security. Enterprises need to have clear regulations on accessing and using internal financial reports to avoid information leakage to the outside.

5. Internal financial reporting templates

For convenience in preparing internal financial reports, businesses can refer to and customize report templates according to current regulations suitable to the characteristics of the business.

5.1 Balance sheet template

• Summary of assets and capital sources at a specific point in time (usually the end of the period).
• Purpose: To assess financial position, solvency and capital structure.

Download

5.2 Business performance report template

• Record revenue, expenses and profits in an operating period (month, quarter, year).
• Purpose: Monitor business performance, determine profit/loss and evaluate the performance of each department.

Download

5.3 Cash flow statement template

• Track cash flows from operating, investing and financing activities.
• Purpose: Control cash flow, evaluate short-term and long-term solvency.

Download

5.4 Financial Statement Notes Template

• Provide detailed information and explain figures in official financial reports.
• Purpose: Clarify key items, helping leaders gain a deeper understanding of the financial situation.

Download

In the context of increasingly fierce competition, building an effective internal financial reporting system is no longer an option but has become a mandatory requirement for all businesses. By applying a scientific reporting process, utilizing standard reporting templates and modern technology tools, businesses can optimize their financial management processes, thereby improving operational efficiency and competitiveness in the market.