Reporting By Department: Seeing the full picture

Background

When you're running a business with multiple departments, it's easy for performance to get lost in the overall numbers.

A small manufacturing business came to us with exactly this problem. They had a gut feeling that one side of their operation was underperforming but without clear data to back it up, making any significant changes felt like a gamble.

They needed the numbers to confirm what they suspected before taking action.

Our Approach

The first step was establishing whether their existing system could support departmental reporting. Most accounting systems have this functionality. It might be called tracking codes, classes, or something else entirely, but the principle is the same: splitting income and costs so you can report on them separately.

Once we confirmed the system could handle it, we turned our attention to making sure the split would be meaningful. We reviewed customers, products, staff, work areas, and general overheads line by line to decide what should sit where.

We also had to weigh up the practical side. Would the additional processing place too much burden on the accounts team? Should we apply the new structure retrospectively or start fresh from today?

Actions Taken

With the system confirmed as capable, we got to work on the detailed but essential task of categorising every line of income and cost. As it turned out, certain customers exclusively used one side of the business and others the other side, which made the split far cleaner than we might have hoped.

The Direct costs and property expenses like rent followed the same logic. Overheads were trickier, with some allocated in full to one department and others apportioned by an agreed percentage.

We worked closely with the accounts team to understand what the new process would mean for their day-to-day work. Fortunately, they were keen. They'd been estimating the split manually for months, so having it automated at source was a genuine improvement. After careful consideration, it was decided not to go back and adjust historical transactions, as the time investment wouldn't have justified the return. Instead, we used the time to create draft management reports, refining them with the leadership team until they were exactly right.

Outcomes

After the initial setup, the business gave the new reporting structure six months to bed in and gather meaningful data. The new departmental reports were included in the monthly management accounts throughout that period, giving the leadership team a level of visibility they'd never had before.

The insight that came from those reports allowed targeted changes to be made with improvements to efficiencies and profitability across the business. And rather than following through on their original instinct to close the underperforming department, the data gave them the confidence and the roadmap to turn it around. Jobs were saved. Performance improved. And decisions were made on facts, not feelings.

Porterdale’s Comments

Opening business owners’ eyes to the power of their accounts is one of our specialities. The information is there; it’s just a matter of getting it out.

If the accounting system is able, reporting by department is a great way of seeing which ones are performing as expected and which ones aren’t. And not always to close down a department if things are going a bit wrong – just to find out and sort out.

This job was a success story as reporting by department prompted increased efficiencies and saved jobs. They’re not all like that but having the information there allows better decision making, rather than knee jerk reactions.

Get in touch with the Porterdale team today and let's talk about what better reporting could mean for your business.

Words by Lindsey Owen

Header photo by Annie Spratt