The Value of Understanding Your Numbers Through Reporting

The benefits of having regular access to high-quality financial management reports are far-reaching. Good reports reveal the efficiency (or otherwise) of the constituent parts of the business. They enable you to deal with potential threats and take advantage of opportunities to grow your business. The compound effect of making regular, quick and high-quality decisions based on a strong set of data and reports cannot be overestimated. 

Most businesses have some level of reporting in place but in most cases existing procedures are insufficient to allow for rapid growth.  

The Importance of Reporting is Twofold 

  1. To have retrospective visibility over past performance (that is, to analyse performance data and use it as a tool to course correct for the future). 
  1. To have visibility into the future (knowing what is likely to happen around the corner) 

What are Management Reports 

Management reports are tools for the management team to make decisions from.  Having your bookkeeper run a monthly P&L and Balance Sheet is fine, however to run a business efficiently you need to understand those reports and dig deeper to really see what’s going on.   

Base Level Reporting 

At the very least you need to have regular access to three key financial statements. They are: 

  1. The Balance Sheet 
  1. The Cash Flow Statement 
  1. The Profit and Loss  

4 Steps to Take Your Reporting to the Next Level   

Step one:  build a reporting framework around your products to determine what is profitable and what is not. If there are non-profitable products (or those that deliver little profitability), should you consider dumping them or only include them in bundles with other products? 

Step two: Build a fully flexible 3-way financial model (P&L, Cash Flow and Balance Sheet) for the next 3 years. Play around with the assumptions, i.e what other products can we put into the offering to customers? 

Step three: Build a 3-year plan based on your findings from Step one and two. 

Step four: Monthly reviews against the plan – what worked, what didn’t work and the whys around both. 

Need Help? 

Most SME’s don’t have the internal experience to action these four steps, nor does the owner have the time.  That’s where a part-time CFO comes in. At The CFO Centre, we don’t just focus on the business numbers – profit and loss, balance sheet, ratio’s, forecasts, but also the less visible “numbers” – what you want from your business – your financial goal for the business, the number of days a month you’d like to work, the number of holidays you want to take, the value you want for the business when you sell, the number of years you want the business to continue (legacy), the number of years until your retirement.     

Both sets of numbers play an important part in your overall success.   

The CFO Centre will provide you with a highly experienced senior CFO with ‘big business experience’ for a fraction of the cost of a full-time CFO. 

With their support and expertise at your fingertips, you will achieve better results, faster. It means you’ll have more confidence and clarity when it comes to decision-making. After all, you’ll have access to expert help and advice whenever you need it.  

6 keys to successful company growth

Hire a superstar part-time CFO

To help you increase cash, profit and valuation and free you up from the burden of day-to-day operations.