The monthly financial report for a small business that a lender can read.

The short answer: a useful monthly financial report for a small business is closed and reconciled soon after the month ends, shows who owes you and who you owe, and lets a reader work out three things. Does cash flow cover the loan payments? Can you pay this year's bills? How much is borrowed against what you own? That is a month a lender can read. At HarperCo, that kind of month comes with Monthly Books Bank-Ready at $850 a month, which includes the Bank-Ready Report.

When I read small-business files on the lending side, at Island credit unions and chartered banks, profit was only where the reading started. Here is what the rest of the reading looked for, in plain words.

What should a monthly financial report for a small business include?

The base is familiar. An income statement shows what came in and what went out. A balance sheet shows what the business owns and what it owes on the last day of the month. Both should tie to reconciled bank statements.

What turns that into something a lender can use is less about format and more about timing and completeness. A month closed within days of month end tells the reader the numbers are current. A month still open in week six tells them something too. Aging lists matter as well: who owes you, who you owe, and how late each one is. A receivable that is 20 days old and one that is 140 days old are both "money owed to you," but they are not the same money.

What is the Bank-Ready Report, exactly?

It is the signature deliverable in our monthly bookkeeping scopes (a scope is how much of the work we do). In our own words on that page, it is your numbers the way a lender reads them.

It is a monthly management report prepared from your books, with plain-language notes on what a lender would notice, for your own use and for conversations with your lender. It is not an audited, reviewed or compiled financial statement. Where a lender asks for compiled or reviewed statements, those come from your CPA, and our report goes alongside.

It comes with Monthly Books Bank-Ready, our standard scope, at $850 a month. That scope also includes:

• everything in Monthly Books, with the books closed by the 10th (a close means finishing and checking a month's books);
• the Bank-Ready Report, every month;
• a quarterly lender-lens review, where we re-read your books the way a lender would;
• AR and AP aging, meaning who owes you, who you owe, and how late each is;
• receipt capture.

Monthly Books, at $625 a month, gives you a monthly close and monthly management reports, but not the Bank-Ready Report or the review. The $225 a month between the two is what buys the report. Monthly Books Plus at $1,200 a month and the Controller at $2,450 a month include it too.

Which three numbers does a lender work out first?

Lenders define the pieces a little differently from one another, so treat these as the plain version. Each one is a question, and each answer reads best as cents on the dollar.

Put another way: if coverage were 90 cents instead of a dollar twenty-five, the payments would be getting made with money from somewhere other than the business. That is the kind of thing a reader notices in a minute.

You do not have to compute any of this yourself to start. The free Books Checkup works out those three numbers from your books and puts them on one page of written findings.

How does a lender read a monthly report?

In my experience, one month on its own is a snapshot. What carries weight is the direction across several months, and whether the story holds together. Coverage drifting down while receivables get older reads differently from coverage holding steady while the business grows. A string of months closed on time says the owner knows where they stand. I wrote about the order these lines get read in what lenders actually look at in your financials.

None of this is a promise about any lender's answer. Every lender has its own policies, and a clean month does not approve anything. What it does is remove the gaps a stranger would otherwise fill in for you.

Do I need a lender-ready report if I am not borrowing?

Maybe not, and it is fair to say so. If no one is lending to you this year, Books Compliance at $395 a month keeps the books current, HST filed and the year-end file clean, on a quarterly close. Monthly Books at $625 a month adds monthly management reports. You can move up a scope when borrowing gets closer. The Bank-Ready Report earns its $225 a month when someone outside the business is about to read your numbers.

Key facts

• Monthly Books Bank-Ready is $850 a month and includes the Bank-Ready Report every month (HarperCo's own price, bookkeeping page).
• The Bank-Ready Report is a monthly management report for your own use, not an audited, reviewed or compiled financial statement (HarperCo, bookkeeping page).
• Monthly Books is $625 a month, with monthly management reports and no Bank-Ready Report (HarperCo's own price).
• Books Compliance is $395 a month, on a quarterly close with no monthly management reports (HarperCo's own price).
• The free Books Checkup is a 30-minute call with one page of written findings, including the three numbers above (HarperCo, free).
• The worked example uses round illustrative numbers, not a real business.
• How lenders read these numbers is Dominic's experience from nine-plus years on the lending side, not a published policy.

Notes like this are general information, not advice on your specific situation — that’s what the kitchen table is for. — Dominic