Are You Reporting Correctly?

Are you thinking about your business reports?

Like most endeavours in life, information is key. It is the intelligence which guides decision making, strategy and day-to-day operations. For business, this information is found in your reports.

Written By Tony D’Agostino – Director

The question I am often asked is ‘what reports should I prepare and review for my business?’

In short, there are some basic reports you will need to prepare and review but also some which should be specific for your business and your circumstances.

Let me elaborate on that statement for you.

The Basic Reports

In your basic reports, there should be at least the following:

Balance sheet
Profit and loss statement
Key performance indicator report
Projected cash flow and budget for the next period

Why these reports? Essentially, they form the basis of solid operational reporting. It is important you prepare them accurately but also take the time to understand what they are telling you.

The balance sheet gives you a snapshot of your asset position at a point in time. In many ways, your financial health. The stronger your balance sheet, the healthier you are. When compared with other periods over time, it will also paint a picture as to whether your business is getting stronger or weaker.

The profit and loss details how much income you have earned over the period and also where those funds were spent. When compared to previous periods, it paints a picture of success and/or failure over specific time periods.

Key performance indicators provide information as to how a business is tracking towards a very specific goal. For example, a KPI for your business may be debtors days equal to or less than 30 days. The debtors days/KPI can track how your business measures up to that goal.

Lastly, cashflow and budgets. Cashflow is king they say. And it’s true. One report recently suggested 82% of small businesses fail due to poor cashflow. That is extraordinary. Not strategy, not marketing, CASHFLOW!

A cashflow projection and budget is a look at or estimate of how your cash position will play out over the next period. It will show whether your cash position is being depleted or perhaps improving!

This is a projection and does require some assumption and estimates, but used correctly, it is a powerful tool of strategy.

More Sophisticated or Other Reports

There are also many other reports a business could generate for review by management. For example:

Inventory report by age to determine how much stock is on hand and how long it has been there;
Sales reports to determine where sales are coming from, which channels, which market segments;
Marketing reports to determine which marketing initiatives have been successful and which need to be reworked or scrapped;
Departmental reports if your business has a number of separate identifiable departments.

Think parts and service for example or by location e.g. Brisbane v Gold Coast.

The list goes on and on really. You can literally get a report for almost any aspect of your business if you build it. The information is generally there.

The real question is which ones do you need?

My advice here is to think strategically. Which of the areas of your business are most critical to your success? Once these have been determined, get reports on these areas.

For example, if you are a business heavily invested in stock, reports around stock make sense. If you are a business whose goal is to gather market share, marketing and sales reports are imperative.

The point here is to choose your reports based upon your goals and your key areas.

Keep It Simple Stupid

But keep it simple, don’t overdo it. There can be information overload. It’s real. Not only does too much information confuse, but it takes time to generate. You need to strike a balance. Further, if you find something in your suite of reports which does not look good or warrants further investigation, you can always gather/prepare more reports.

The other point about keeping it simple is that information is only useful if its timely and accurate. If you need to wait a month or two for example to get a key report, what value is it? If you have a report which is not accurate, what good is that?

You Have the Reports – What Now?

Ok, so now you have built a great suite of reports measuring key aspects of business – what now?

Well, part of your management routine needs to be review and analysis of these reports. Management needs to take the time to understand the reports and most importantly what they are telling the management.

Are we headed for a cashflow crunch?
Are sales revenues increasing or decreasing?
Can we afford to move into a new market?
Are we becoming more efficient or less?

These are but some of the questions.

Lastly, you need to act!

Once armed with this information, it is all wasted if you don’t act. There needs to be a plan in place to work on these areas of the business which require action as shown in the reports.

Without this, it is a costly and time-consuming exercise with no return on investment.

How Can We Help?

This project of building, interpreting and acting upon the data may seem daunting but you can get help from a number of sources including bookkeepers and your client manager or directors.

Bookkeepers can assist to build the reports. They will know how to configure your software to gather the report and also present it in a readable format. There can be graphs, charts, tables or written words and numbers.

Your client manager can help you understand reports and show you their key lessons. They will talk you through them and explain what you need to know.

Lastly, your directors can assist to determine the key areas of the business you need to report upon and also use them to assist in strategy discussions and decisions. These can be very powerful sessions with lasting impact.

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We’ve created a handy guide to remind you of the essential financial reports every business should review regularly. Download it, print it out, and pin it up near your desk or workspace – it’s a quick reference to help you stay on top of your numbers and make confident business decisions all year round.

Download Your Guide

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