Preparing financial statements is a fundamental step for understanding the financial position of any organization in Saudi Arabia. These statements help evaluate performance, track obligations, and ensure compliance with regulatory authorities and investors.
In this article, we explore the key types of financial statements, how they differ from financial reports, the preparation process, and how EZ Integrated’s e-invoicing solutions improve your financial operations.
What Are Financial Statements and Their Types?
Financial statements are structured documents that reflect a company’s financial health during a specific period. Preparing financial statements allows organizations to make strategic decisions based on real data.
The main types of financial statements used in Saudi Arabia and worldwide include:
- Income Statement: Shows revenues, expenses, and net profit or loss.
- Balance Sheet: Lists assets, liabilities, and equity.
- Cash Flow Statement: Highlights incoming and outgoing cash.
- Statement of Changes in Equity: Explains changes in capital and reserves.
Financial Statements vs. Financial Reports
There is often confusion between financial statements and financial reports. However, there are clear differences:
Financial Statements: Official documents prepared according to accounting standards like IFRS, typically submitted to stakeholders and regulatory bodies.
Financial Reports: A broader category that includes internal reports such as sales or expense summaries.
In Saudi Arabia, preparing financial statements must align with ZATCA’s standards, so distinguishing between the two is crucial for full compliance.
Also read: Preparing Accounting Reports: A Smart, Step-by-Step Guide
Who Prepares Financial Statements and When?
Preparing financial statements is typically the responsibility of accounting departments or licensed accountants. In large companies, external auditors may review the statements to ensure transparency.
Statements are usually prepared quarterly or annually, serving the core objectives of financial disclosure and regulatory compliance in Saudi Arabia.
Preparing Financial Statements: Main Steps
Preparing financial statements in Saudi Arabia requires accuracy and compliance with ZATCA-approved standards. Key steps include:
1. Collect Financial Data
Start by gathering revenue, expenses, assets, and liabilities using accounting and POS systems. Any error here will affect the final results.
2. Apply Classification Standards
Data is organized into categories such as current and fixed assets, operational revenue, and expenses. These classifications ensure accuracy in preparing financial statements.
3. Create Core Statements
- Income Statement: Measures profitability.
- Balance Sheet: Shows overall financial position.
- Cash Flow Statement: Supports liquidity management.
- Changes in Equity Statement: Tracks capital and reserves.
4. Analyze the Statements
Key indicators like liquidity and profitability ratios are reviewed to assess whether the financial objectives were met. Analysis supports smart planning and decision-making.
5. Review and Final Approval
Once analysis is done, statements are submitted to certified accountants or external auditors. Reviewing ensures compliance with ZATCA’s requirements before presentation to management or partners.
The Role of E-Invoicing in Preparing Financial Statements
E-invoicing provides the foundation for accurate financial statements. It is more than a billing tool; it becomes the primary data source for budgets, income statements, and cash flow analysis.
Manual or incomplete invoices can lead to misleading figures. On the other hand, when invoicing is fully electronic and integrated with accounting systems, data flows in real-time, enabling the preparation of financial statements that reflect reality.
Additionally, e-invoicing minimizes manual reconciliation of sales, inventory, and expenses by automating data exchange. This transforms financial statements into powerful analytical tools based on reliable data.
Also read: 5 Benefits of Partnering with E-Invoicing Solution Providers
EZ Integrated and Phase Two E-Invoicing Compliance
With Phase Two of e-invoicing now active in Saudi Arabia, companies need advanced solutions to ensure compliance and seamless integration with the FATOORA portal.
Benefits of EZ Integrated’s Solutions:
- Certified by ZATCA as an official e-invoicing provider.
- Direct integration with the FATOORA portal and all accounting systems.
- Full compliance with Phase Two: the integration phase.
- Flexible systems tailored to each business’s size and needs.
- Employee training for efficient data and invoice management.
- Ongoing technical support for operational continuity.
Final Thoughts
Preparing financial statements in Saudi Arabia is no longer just an accounting task. It is now a strategic step for growth and transparency.
With EZ Integrated, you can connect your accounting systems directly to the FATOORA platform and generate accurate, reliable reports that strengthen your business operations.
Get in touch with our team today for a free consultation and learn more about our certified solutions.