8/6/2019 Most important month-end reports.

http://slidepdf.com/reader/full/most-important-month-end-reports 1/3

performancecontroller.comhttp://ww w .performancecontroller.com/2010/10/w hat-are-the-most-important-month-end-reports-f 

Performance Controller » What are the most importantmonth-end reports for the CFO and CEO and why is evenmonthly reporting now too slow?

Gordon Wood lawrence berezin Gordon Wood Joni Tegeler Truden best f orex system buy anabolic steroids nursing schools

 

The first part of this was a question I saw in a local forum put by abusiness management accountant. It occurred to me that asprofessional business consultants, which internally in his companyhe is too, we answer this question frequently when designingreporting systems for our CFO and CEO clients.

It may sound ambiguous but I believe to find the answer we needboth top down and bottom up perspectives. Modern reporting

trend of corporate high flyers to motivate performance, and peoplelike software vendors may make this sound hackneyed, but I saythe profit and loss and the balance sheet reports (PBSL) criticalThey are are the most important reports you they ever need in abusiness.

Having said that, here is my thoughts on what else is important andwhy. I will also go further to say monthly is now too slow with manycompanies demanding weekly or even daily reports to be able torespond to more rapid market cycles that changes are much faster.

We all know the most important reports are the ones the CEO and the executive team use to drive the

business and manage the investment risks. Typically, in the equation Victory = Velocity, + “Variability, +Visibility are all the watch words a CEO needs. Reports therefore, must give the business the power tomanage these elements well.

In other words business momentum, market dynamics and management transparency are the commoningredients we all need to be able manage well. And to do that and keep the rhythm going we need goodinformation routinely delivered in each business process. More importantly we need to be able have get theanswers to the questions we ask that the information brings up with an easy ability to do deeper analysiswithout setting up a task force commission.

 As to content and who reports what, to track what’s gone on and manage what’s being planned theperformance management and planning and reporting process that the CFO team provides is vital. It is amust as well that it be timely, consistent and very reliable with well integrated and easy to understand reports

that everyone involved can access and see.

Taking a high level view on that content can be good. This may typically be a ratio summary or dashboardwith key performance measur ement (KPI) of activity critical to success. Once that is well established thecollaborative of use KPI reporting is very effective. But it can take some time to mature as the behavior wesee in the detail is not always intuitive at first in KPI summary. For example in one businesses a late deliverysignal on a KPI may indicate serious issues that have immediate loss of business consequences with salesretention and profit then at serious risk. Where-as in other businesses while it may still be important it is lessof a risk and can be managed. This may even differ from product to product in the same business theunderlying issues and impact to be addressed must understood well before a KPI view is set up.

To get that right if you are in CFO team and preparing reports you should go ask the CEO first what he or 

she needs and then ask the executive team and so on down to see if they are aligned on the key numbersand how they weight-out. They all will quickly tell you what is important. And when you related that to thePLBS at their level you will be able to see where it all fits. If you are the CEO and your team have KPIs thatalign with yours, that in turn can be their score card, If not you will have issues. To help on that the CFOteam, using the PLBS as the base can tailor reports that everyone needs to show delivery performance andstay aligned with the business goals.

8/6/2019 Most important month-end reports.

http://slidepdf.com/reader/full/most-important-month-end-reports 2/3

In the end all reports must be designed such that everyone who is involved in the business can see their partand see their current position compared to the plan and their contribution expected. And when it falls short itmust show have options to make reforecast projections on recovery action.

For KPI or dashboard reports to be accepted they must also always be supported by more detail to dig downmore and when things are not right and preferably down to the transaction level an updated on a real timebasis in line with management responsiveness cycle at each level . For example if revenue is volatile due tomarket competitiveness each day, then there is no point reporting monthly as action taken on that is far toolate to stop business erosion. And if you find pipeline stacking shows sales spikes at the end of the month if 

you change you reporting to be weekly it will flatten out and can increase the momentum.

 And whether it is sales and product profitability by customer or delivery activity for supply or just compliance,the center piece for all this again is always the profit and loss statement and the balance sheet to build theperformance focus around.

To understand this more the profit and loss statement has embedded in it all the trading activity thatoccurs.The balance sheet in turn shows the position and health of the business for all then financialresources invested, including such things as available cash and working capital and working assets and soon. The link of the trading activity to increasing net assets and in turn the shareholder value focusesattention on the investment growth and risk management and to maximizing the rate of return And just likethe profit and loss, a must-have is the forecast update to show projections to correct erosion issues.

Finance people know traditional financials with just numbers are not enough with the performance ratios andvariance reporting implicit on each. For example comparative performance to plan and last period are verykey measures as is gross profit and return on investment. At the operational level, equally important aresuch things as the performance of accounts receivable which best measured in days overdue and inventorymeasured in the relative number sales days stock held.

These reports can all take differing forms and there are so many ways to visualize the key elements . Theymay also be called by different names and even split into parts to add more activity detail. But in the endthey are fundamental. They have to disclose all revenue income and all business activity costs and relevantrations in controllable chunks to show the net trading result The venture investment in turn, as deployedmust be disclosed and grouped by risk within each class or asset at current conservative carrying valuesand liability at all up and even potential exposure. In corporations for example that often span multiplegeographies or regions and cover varied activities the consolidations, they must also cater for often complexvarious ownership interests, currency perspectives group eliminations and group level fair value provisioningand must handled very efficiently.within the reporting environment.

In addition International Financial Reporting Standards, (IFRS) now being more widely adopted across theglobe and by regulators, is seeing additional disclosure. For some especially in Asia where it now cominginto force, the a take up effort is quite significant as changes are being made. But the flipside is theopportunity this presents to many, who the need to refocus to upgrade their reporting, to use this as thecatalyst to reduce their reporting cycles times by improving processes and systems. Better reporting aside,the cost to benefit of the improved production for a more efficient system quickly becomes very clear.

Hence these two reports which include KPI’s are the most vital as the center piece of all business

management. They are not only vital for collaborative transparency of all accountable management to seewhere they fit but also to let them be seen to be doing their part. All other reports are then be built aroundthese including cash flow reporting.

The technology we have now sees, typically web based drill down and analytics with security to filter accountable reporting at all levels. So even if it all sound so complex all this is now very possible to do fromthis single report base taking data from multiple transaction sources and system.

So once the KPI and key financials are fully set up the next question may be, what do the operationalmanagers want? My answer is to find out what drives the activity and how the outcome measured impacts thefinancials KPIs the CEO sees. Then report as a sub-set and you cannot go wrong. For example, if you are inproduction, the key drivers are sales orders and inventory levels to tie them into in the financials. Likewise if 

sales are your aims, then sales lead conversions may be your critical drivers; as do overdue accounts thattie to the working capital as debtors show at risk conversion to cash.

Hence, when all that is in the reporting model, means at any level and any perspective performance trackingagainst plan and ongoing projections is now very simple. And be-it Operations, Sales or back-office or theCEO the CFO and even Corporate HQ they will know their value and can collaborate well to fix any

8/6/2019 Most important month-end reports.

http://slidepdf.com/reader/full/most-important-month-end-reports 3/3

roadblocks and marshal resources as needed in context of the overall picture. No less they can all see anddiscuss what is happening in the business with much more comfort in the answers they give and get to havecontrol and more time to concentrate to grow the business.