Record to report explained, from bank line to board pack
Understand the record to report process, from source documents to an explained monthly pack, with a worked example linking profit to the bank balance.
Your monthly report shows a profit, but the bank balance has fallen. A partner asks whether the company can afford another hire, and answering means opening three files and calling the accountant. The figures exist; the explanation still needs assembling.
A connected record to report process gives those figures a clear route from the original transaction to the report you use to make decisions.
What is record to report?
Record to report, or R2R, brings financial transactions into the accounting records, checks them, closes the period and produces reports. SAP describes this broad sequence as recording, accounting, closing and reporting.
For a growing company, it connects the people collecting documents, the external accountant and the owner reviewing the month. A board pack can simply be a concise set of reports for owners or partners, explaining what changed and what needs a decision.
Four stages from documents to a useful report
1. Gather the transactions and their evidence
Bring together invoices, credit notes, expenses, bank transactions and relevant payroll information. Keep dates and supporting documents identifiable. A bank receipt shows that money arrived; the invoice helps establish which customer paid and what remains outstanding.
2. Reconcile the records
Check the bank against the accounting records and customer and supplier balances against their supporting invoices. Investigate differences and assign unresolved items to a named person. Our bank reconciliation guide explains this step without hiding discrepancies behind unexplained adjustments.
3. Close the reporting period
Agree adjustments with your accountant, including prepaid expenses, costs incurred before invoices arrive and depreciation. A month-end close checklist helps track preparation and review. Identify the report's period and version, and explain important corrections to anyone who received earlier figures.
4. Explain the month
Connect the results, balance sheet and cash movements, then investigate the changes that matter. The management accounts guide covers what the pack can include. Cifrova's monthly financial reporting helps you bring that conversation into a regular workflow alongside your accountant, with the scope of any human support agreed beforehand.
A worked example from profit to cash
An illustrative services company records €50,000 of revenue and €42,000 of operating expenses, including €2,000 of depreciation. Its operating profit is €8,000, yet cash falls by €10,000.
This simplified example uses invented figures and excludes VAT, interest, tax, inventory and other movements.
| Item | Amount |
|---|---|
| Opening cash | €40,000 |
| Operating profit | +€8,000 |
| Add back depreciation | +€2,000 |
| Increase in customer receivables | −€15,000 |
| Increase in operating supplier payables | +€3,000 |
| Cash used in operations | −€2,000 |
| Equipment bought and paid for | −€6,000 |
| Loan principal repaid | −€2,000 |
| Total change in cash | −€10,000 |
| Closing cash | €30,000 |
The €15,000 is the increase in receivables, not the total owed or necessarily overdue. Depreciation is a non-cash expense, while customer and supplier balances explain further differences between profit and cash, as ACCA's cash flow guidance explains. Equipment and loan principal belong to investing and financing movements.
Each line should trace to evidence: customer records, purchase documents, loan information and reconciled bank balances. That trail lets the owner question the explanation before using it.
Give every handover a responsible person
Agree who supplies documents, prepares the records, reviews accounting treatments and explains the report. Keep payment approvals and commercial decisions with the people authorised to make them.
Reporting also needs follow-up. Microsoft distinguishes R2R from operational processes such as order to cash. If the report reveals a disputed invoice, assign it to someone who can resolve it. A cash forecast then adds future collection dates and payment commitments to the checked balances.
Start with the last completed month. Trace the bank balance, one customer balance and one significant expense back to their supporting records. Wherever that journey breaks down, agree who will fix the handover before the next monthly review.