Advantages and Disadvantages of Company Reports
Business reports supplied by employees or managers act as a way to convey performance information and business strategies to investors and creditors.3 min read
There are advantages and disadvantages of company reports. Business reports supplied by employees or managers act as a way to convey performance information and business strategies to investors and creditors. Business reports include a variety of subject matter such as:
- Cash flow and income statements to assess business growth.
- Business plans to set the plans for the future.
- Mission statements to state the main objective of the company.
- Annual reports to disclose the past year's performance.
- Feasibility studies to help determine future plans and projects.
Government regulations and lending agencies require business reports from businesses, especially publicly traded companies. They serve as a way to disclose financial statements and allow investors to understand the company's current position and assess risk.
While business reports can be beneficial for management, there are limitations. The costs associated with creating the reports can be quite high and prevent future expansion and operations. The reports can also be questioned based on the qualifications of those who have prepared the reports.
Types of Business Reports
For all types of reports, the goal of the report should be clear before you start. If the report is expected to influence the readers, the report should provide data that supports the overall agenda. This is not needed when the goal is to share facts and figures. Some types of reports include the following:
- Analytical reports allow you to evaluate how a business is performing. This can include recent sales numbers, financial outcomes, and the effectiveness and results of recent campaigns.
- Feasibility reports allow you to determine the viability of new ventures by allowing researchers to determine the pros and cons.
- Progress reports allow clients or upper management a chance to see the current state of a project including any delays, issues, and next steps.
- Conference reports detail the events, content, and how new information will be implemented that was learned at a conference or training course.
- Annual reports are expected to be full-disclosure documents with an income statement that provides company earnings, a balance sheet that lists company assets and liabilities, and a cash flow statement on how all cash was used. The annual report can also act as a marketing tool to display figures that show growth or better than expected results.
Advantages of Business Reports
Business reports act as a way to measure progress, monitor growth, provide performance evaluations, and track and address problems. These reports offer an advantage when evaluating a company by:
- Monitoring operations procedures within the company.
- Allowing managers to use the reports to review and corrective actions that are not effective.
- Supplying upper management important information to make decisions.
- Offering insight into the attitude and motivations of their employees.
- Providing employee performance evaluations to determine that work is being done properly and efficiently.
- Evaluating investment proposals.
The greatest benefit is the ability to provide management and investors with information that is needed to make important decisions. The reports supply company strengths, weaknesses, and how to use the information to benefit the company.
Disadvantages of Business Reports
The downside of business reports is they are not in-person interactions and therefore do not allow the opportunity to ask questions or provide feedback. If the data is interpreted incorrectly, this can cause issues. The source of the reports should also be checked for any biased messaging. Other examples of some disadvantages of business reports include:
- Reports are time-consuming to create.
- They are expensive to research and write.
- Technical reports can be difficult to understand.
- Implementing report recommendations can prove difficult.
- Financial statements tend to address areas of the business that are easy to quantify while ignoring qualitative aspects that provide major benefits.
Financial reports have an additional disadvantage, even though they are very important to an organization; analysts require a data comparison from other companies in the industry to compare and contrast ratios in the financial statement. If the report is only about one company, analysis of the data doesn't present all the necessary information to make decisions. If a comparison is needed, the annual reports from all companies should be used to compare the ratios or return on assets and return on equity. One caveat is that the annual reports are only printed once a year, and the data may be outdated.
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