At the end of the financial year, companies are expected to prepare an annual report for the Government, usually to the Chamber of Commerce or any other responsible institution.

Usually, these annual reports need to be presented within 6 months after the end of the financial year. That is, if your financial year ends on the 31st December, you would need to submit this report by the end of June. Many companies wait to publish the annual reports until the very last minute. Fair enough, it’s not ilegal and it’s completely valid as long as the deadline is met. However, from the business perspective, this is a mistake.

The reason why, in my opinion, it’s a mistake is because not preparing the financial statements until the very last minute can cause the business to lose a lot of vital information that might be useful to evaluate if the company is going in the right direction.

Big companies usually complete their financial statements during the first quarter, leaving last minute adjustments till the end as there can be events that might need to be included in the financial statements, or material corrections. Companies in the stock market they might even need to complete it earlier as they face audits that might request them to adjust a lot of accounts to reflect the correct financial information.

However, one thing is when you have one last minute adjustments, and another thing is when you don’t know what is going on in your business. In the end, the most important thing is to know whether the business makes enough money and that is not only selling, but also keeping costs under control, and knowing what they owe and what they are owed.

For example, a business may have already decided to invest a big amount of money to expand, but once they see the financial statements six months later they see the business was not doing as well as they thought, which could be an avoidable risk. On the other hand, a company may think they are not doing well enough and might be missing interesting investing opportunities. Therefore, timely information is vital in order to avoid unpleasant surprises and know where the business is standing.