Financial Control-Reporting Review in Executive Meeting
There are 3 key areas involved in the Financial Control of Your Business
1. Financial Management and Reporting
Having a good grasp of your businesses financials and getting regular monthly updates in the form of a monthly performance report with a section dedicated to financial performance, is critical to the ongoing success of your business.
Entrepreneurial businesses are commonly started by people with a specific expertise, whether technical, service, or trade based, the owners will tend to initially focus on their area of expertise, and as a result, as the business grows the level of attention to Accounting & Financial Control may be overlooked.
If this happens, there comes a point where those processes and systems will need to be upgraded to provide the level of information required to effectively manage and grow the business profitably and manage cash resources.
The Monthly Executive Performance Report is the document that pulls together all the relevant information for review by the board or executive team.
A good report should contain all the information necessary to facilitate decision-making at the senior management level. It should lead them to ask the right questions and initiate a chain of actions that will enhance the ability of the business to achieve its short-and long-term goals and create ongoing sustainable shareholder value.
Your C.F.O (Chief Financial officer) or your senior Finance Person if you don’t have a CFO at this stage, will have a critical role to play in ensuring that the information received by the Executive Committee or Board is accurate & reflects the overall health of your business.
If you don’t have an experienced financial expert whose skills & experience are at the CFO level, you might want to consider hiring an outsourced virtual CFO. This can be a valuable and reasonably priced option to have those high-level skills in your business at a fraction of the cost of hiring an experienced full-time CFO.
Key figures would include sales, gross margins, admin. & general overheads, profit before tax, balance sheet and cashflow
Significant variances should be analysed and explained in the financial commentary section and include recommendations to rectify.
When a potential investor is considering acquiring equity in your business, or you seek a debt facility with your bank, that’s what they will want to see. And not just the latest numbers, they will probably want to see them for the past two years, depending on how much money you want to borrow.
Doing those things right is self-serving. They will assist you in borrowing more money or bringing in other equity partners in the future.
2. Key performance indicators (KPI’s)
Performance information should be focused, with key elements highlighted. Where appropriate, all problems, explanations and solutions suggested by those who prepare the reports should be laid out in the performance report.
The KPI’s should:
- draw together and integrate management information.
- reflect the critical success factors of the organisation and provide a high-level aggregate overview.
- provide a reliable, easy-to-understand, base through which to provide information that the executive team finds meaningful.
The Management team should be able to drill down from high-level KPI’s to identify the underlying cause of a problem & recommend appropriate action.
3. Cash management and forecasting
Especially for a start-up or a business managing with limited funds available, managing and your cash resouces is critcal to the survival a d well-being of your business. Many profitable businesses actually fail as a result of not managing their cash resources.
There are a limited number of measures your business can take to improve and increase cash resources:
- Increasing selling prices without increased unit costs is the most effective, but challenging options
- Increasing sales volumes can be achieved in a number of ways
- Decreasing cost of sales has the same impact as increasing selling prices
- Reducing indirect (i.e. Non-productive) overhead expenses – mainly administrative and sales related People costs, i.e. not directly related to producing your product or service)
- Decreasing average debtor days by aggressive collection of overdue debts or renegotiating payment terms.
- Decreasing the $ value of stock or work in progress
- Increasing creditor days i.e. when you pay your suppliers
An ongoing process should be in place to manage these factors andthey should be regulary reviewed, at least weekly, by management
In Conclusion
If you believe that the Financial Control Program might be right for you, you can book a free 15 minute call with me personally, so we can explore whether it is a good fit for you and your business at this time.
Click on the button below to book an appointment in my calendar:
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Or alternatively, send me a text message with a brief explanation of what you need help with, and I will call you back for an initial chat. My mobile number is 0418 277 137
