Timely Financial Reporting: Three Tips

Average companies usually have these in common:
 

• They have a bookkeeper or an accountant (no Financial Controller, Director, or CFO); 
• The financial reports (not just outstandings) are prepared 2-4 times per year - usually within 30 days of end of period; 
• These reports are actually reviewed by the owner/manager within 15 minutes every few months - and usually more than 30 days after the end of period.

If you do more than the above, including reviewing finances regularly (and I don’t just mean overdue receivables), then congratulations – you’re doing better than most! But if you’re not quite there yet, here are three ways to make your financial reviews more beneficial.

The Rewards of Reporting

Granted, finance is not the most exciting topic in business, but it is definitely among the most essential. Most entrepreneurs don't prioritise finance because it’s boring, it’s stressful, and it’s all in the past. They would rather be working on new products, pushing sales, and putting out fires.

You likely understand – at least theoretically – how important finance is in business, but perhaps you haven’t discovered the full benefits of financial reporting yet. And I’d like to propose a reason for that: you’re looking at your financial data too late.

There’s no excitement in looking at something weeks or months after it happened. If you want your numbers to tell you an exciting story, you need to hear it in real-time (or as close to real-time as possible). Timely financial reporting is the name of the game, and ’timely’ really is the key factor here. One of the best performing strategies we work on with clients is streamlining and speeding up their reporting processes. And here are three easy-to-implement tips to initiate those improvements.

Three Tips for Timely Financial Reports:

1. Set a hard deadline

Set your financial report date and stick to it – chopping and changing the date can affect the accuracy of your reports.

“End of month” may mean the report is prepared by the 5th/6th of the next month, but getting it in by the 15th/20th of the next month is ridiculous. You may mess up 1-2 months of reporting by changing the deadline (moving from 15th to 1st might mean less invoices recorded in month 1 and more in month 2), but you’ll get back on track within the quarter. Hard deadlines mean no excuses, and no exceptions.

Commit to the deadline. Communicate it to the relevant team. Hold them to it.

2. Empower and Delegate

Your Head of Finance is in the position to look over your finances, and as such it’s important that you give them the autonomy and access they need to perform their job well. This may be an information requirement, or addressing a communication bottleneck, but it should be within their scope to demand information from anyone within the company.

This also means that the Finance team should not be ‘looked down on’ by the rest of the company. There is an unfortunate prevalence of finance not being in the cool club, and this will impact the benefit that they can bring to the company.

3. Ongoing Reporting

By frequently updating your financial data into pre-prepared templates throughout the month, you alleviate some of that end-of-month pressure. Entering numbers weekly makes the report a compilation exercise, rather than a daunting, labour-intensive task that is due alongside all those other deadlines.

Not only is this technique faster and more efficient, it can also be easily delegated – and not just to the finance team. Each member of your company can (and should) enter their department data as required, allowing the finance team to focus on control and reporting, rather than invoice chasing and data entry.

Bonus:

If you dont already have a system set up, please look into getting one arranged. We - and a number of clients - use Zoho Books, as well as some of the other products in the Zoho suite.The other common options are Xero and Quickbooks

Financial Reporting Going Forwards

Timely and accurate financial reporting is essential to your business’ successful operation. It provides the CEO, Executives and other Decision Makers with a deeper and more accurate understanding of operational issues. Financial reporting should be the basis of informed decision making and planning. A lack of financial visibility is a handicap to yourself and your business.

At Kaizen, we’ve worked with over 1400 businesses in the last 11 years, identifying how to improve financial reporting systems and show you how to operationalise insights gleaned from reporting to make quick and effective business decisions. Let’s talk about how much more money your business can make.