Funding Ready Forecasts – A Bespoke Approach

Background

Our client needed a better way to report their month end accounts. Due to the nature of their business, standard Sage reports were not suitable. Regular prior period postings meant the figures for the profit and loss report in a previous month could change, which led to unreliable management accounts for the MD to use.

Those prior period changes raised questions, “Why was £x revenue reported in month 2 but now it’s showing £y revenue?” Management reporting requirements also resulted in unusual summarisation which the Sage reports struggled to accurately represent.

The finance team of four had been manually creating the monthly profit and loss and balance sheet reporting, taking lots of time and opening it up for human error.

Our Approach

We were asked to create a better way to report this business’s month end accounts. Any change in reporting had to both save time and offer accurate information.

We looked at reformatting reports straight out of the system and considered other versions. We looked at the available information in Sage, make the report easy to create and ensure accurate financial statements. The business had annual revenue of around £3.5m per year so accurate reporting was essential through their growth period.

Actions Taken

We had already performed a process review for this business so we had a good idea of how things worked and where we could fit in the new report. The client wanted to keep the existing manual format as much as possible, so we had a base to work from.

After a few drafts, it was decided that the best way to approach this reporting was to take the YTD trial balance from Sage at the end of every month. This could then be compared to the previous month’s YTD TB and give the monthly movement. This mitigated any prior period values from changing from the previously distributed version.

To get this to work, we mapped the nominal codes to the relevant line in the reports and set up worksheets for the closing TB for each of the 12 months to which an exported csv version of the Sage TB could be added. The data from these TBs were fed into a workings sheet which took each month’s values, deducted the latest one from the previous one and returned the monthly numbers.

A translation file took the TB data, ran it against the mapping and added it to the reports. Formula checks were put in place to ensure that everything balanced and highlighted if there was an error. As an additional function, we added in the year’s budget values so we could see the year including the actuals and forecasts.

We made some final tweaks to the presentation which created an easy-to-read month end management accounts report.

Outcomes

The month end reports which had taken the team hours to prepare was now available in minutes. No manual entry required and no calculator needed.

This time saving has allowed the accounts manager to work on analysing the figures and providing commentary rather than keying in. This has opened up communication between the accounts team and the MD, who now feels much more informed on the performance.

Porterdale’s Comments

We firmly believe month end accounting should be neither a chore nor an unused piece of information issued to tick an imaginary box. We’re here to support finance teams produce timely and accurate management accounts for management and directors who we then help to review and to make the best decisions going forward.

This exercise resulted in both and we were happy to see this growing business adopt this regular reporting and continue to enhance their collaboration.

We can help your business to do this too – contact us.

Words by Lindsey Owen

Tape Measure header photo by Diana Polekhina