Delivering financial data that managers need

This should be the aim of any accounting system.

The data is not primarily for the accountant or bookkeeper, but for the managers and leadership team members within the business.

Business activities obviously occur on a daily basis and I believe that is where the accounting system should commence – on a daily basis.

The daily information would relate to the requirements of the individual business but as an example could include:

Sales

Average sale

Number of customers

Weekly Performance Report: This concept is widely used in larger businesses but unfortunately, many SMEs do not receive key data on a weekly basis. What can be included is the KPIs for that week together with the weekly profitability report which is a realistic estimate of the activities conducted for the week.

This report should be as close as possible to ‘real-time’, which would enable managers to recollect what actually happened on a particular day, to understand why the overall result was not what they envisaged. Or alternatively, that an ‘accidental improvement’ may have been a significant factor in a better than expected result to emerge.

A month is a long time and if a business does not have a weekly performance and profitability system in place, some of these contributing factors may have been forgotten.

Monthly Financial Accounts: This is the financial summary for the month’s performance and should be able to be reconciled very closely with the Weekly Performance Reports. This will enable managers to have confidence in the Weekly Performance Reports, so that they are able to make real-time decisions to improve the business performance as incidents occur.

A comparison to budget report should be prepared on each business unit.

The balance sheet should be evaluated particularly relating to debtors, inventory, creditors and bank balance.

Towers Business Development can assist in the planning of ‘strategies to think like a larger business’. To find out more, contact us on 1800 232 088 or email to arrange a complimentary initial consultation via Zoom.