Annual Financial Statements is a legal requirement and must comply with prescribed standards in accordance with the International Financial Reporting Standards (IFRS) or IFRS for SME’s. This is a worldwide reporting tool that enables third parties such as Banks and SARS to determine how well a business has performed over a period.
Financial statements are also a tool that you, as the business owner can use to measure your business performance. As a business owner you want to know if your business is making a profit and is solvent. All major banks and independent lenders would require Annual Financial Statements when they consider funding in the form of either an overdraft or a business loan which can be used to either expand your business or as short term working capital.