Many businesses fall into one of three traps with their financial reporting – an absence of up-to-date financial information, the wrong financial information or too much financial information. Each causes different problems, so striking the right balance is important.
Having up-to-date financial information means business decisions are well-informed. Without real-time financial information, ensuring your prices are correct, taking on employees, forecasting, closely monitoring overheads and fundamental changes to your business model will be an exercise in guesswork.
You also need to ensure you have the right financial information to drive business growth. Comparing your monthly profit and loss accounts to last year may not be enough. It’s therefore important to understand the key drivers behind these results.
Every sector has industry standard Key Performance Indicators (KPIs), which need to be considered in tandem with your financial results. Some KPIs will be “lead measures” which provide insight for results in future months. Business owners need to drive these KPIs to achieve the results they want.
On the other hand, you might have pages of financial information with lots of supporting documents. All of the information about your sales pipeline, analysis of overheads, profit percentages and conversion ratios is there, but this can lead to a distracting amount of information to read and interpret every month.
Business information overload is a common problem and is not easily recognised. All the reports you receive may have been useful in the past so you continue to receive them every month. The reality is some financial measures are more important than others and determining the frequency with which you receive this information is equally important.
Having a dashboard of live KPIs and financial headlines helps business owners focus on what is important and take immediate action where necessary, limiting the extent of emerging issues before they grow.
Similarly, providing clear parameters to your finance team on the monthly information you need will limit the volume of supporting documentation you receive each month, allowing you to focus on what is important for the future of the company.
Whether you’re drowning in financial information or lacking the right numbers to make business decisions, Armstrong Watson’s outsourced accountancy services can help you get the financial reporting your need.
For more information contact Glenn Clifford-Perkins on 01768 222030 email Glenn.Clifford-Perkins@armstrongwatson.co.uk
