Fast Facts, Better Decisions
Background
Our client needed a report to give an indication of where the month end numbers could end up in the monthly management accounts before they were issued.
The finance team of four were struggling to be able to give the MD the month end information quickly enough, as they were using Sage 50 Desktop for processing but also producing lots of external Excel reporting, which clogged up the reporting function.
They asked for our help in producing a suitable report and speed up the reporting process.
Our Approach
We knew the client well and had previously performed a thorough process review so we could see how a report could be produced with relatively little disruption to the existing workflows.
After some discussion with the client we decided that a “Flash” report would be perfect for this purpose. The definition of a Flash report is “a concise, quick summary of essential financial metrics”. In this case we proposed to use it as a snapshot of the previous month’s performance until the complete management accounts were available.
The flash report could be issued a couple of days into the new month in a summarised fashion, with estimates for transactions not yet processed.
Actions Taken
A few months previously we had created an Excel based monthly management accounts format which took information from a trial balance and fed it into a profit and loss report and a balance sheet. Adding this flash information to the existing monthly report seemed to be the best option – keeping month end accounts to one file.
The flash template was added in and we summarised the information into key lines; sales, direct costs, labour costs, and overheads. To populate the transactions that had already been processed, there was a suitable report available in Sage 50 Desktop which compiled nominal transactions based on the required dates. We found we could add a .csv download of this report into a translation worksheet and have the flash template read this. Estimates of un-processed transactions are added in and a total produced.
We incorporated the flash template into the monthly management accounts, so we were able to enhance it by including existing information. We used the previous month’s actuals, the current month flash and the rest of the year forecast so there was a picture of the full year profit and loss.
Outcomes
The client now uses the flash report, which is produced a couple of working days after the last day of the month. The benefit of the report is that it can be produced not only at the end of the month, but at any point when the client might want to see how the month is going.
We kept the processing time to around 10 minutes. The MD can now compare their instinctive sense about the last calendar month’s performance to what’s gone through the accounts. They can plan for the next month even before the final monthly management accounts are published.
The flash report is not designed to be the same as management accounts, due to the nature of how the report is produced using estimates. It is a tool to assist decision making, as it gives an indication of the direction of travel within a tolerance level. This is vital in a fast paced business where agility is key.
The advantage of choosing Porterdale
Whilst Flash reporting is a regular occurrence in large businesses, they’ve yet to filter to a lot of smaller entities. Our varied FD and FC experience means that we have used different reporting methods in the past and know how they can aid decision making – you don’t have to be a big business to make the most of that.
We can help you with your reporting requirements too – for more details please contact us.
Words by Lindsey Owen
Decisions header photo by Jon Tyson