Tag: Reports

The 5 Essential Financial Reports You Should Be Asking For in Your Business

A question I often get asked from my business owner clients is “what reports should I be asking for so that I can keep my finger on the pulse on my business”.

Now this does differ slightly from business to business. For example, if you are a retail shop, then you’re going to automatically have daily figures available to you as part of your normal process. However most businesses should be asking for weekly, monthly and quarterly reports.

WHY I NEED TO READ REPORTS!

Before I go through the reports in detail, I know that a lot of people don’t like looking at the figures in their business. And usually this is because they don’t know what it is that they’re looking for. So usually then their accountant or bookkeeper (or receptionist!) gives them a monthly report, they glance at while holding their breath, and then either breathe a sigh of relief if it shows a profit, or they grimace and swear when it shows a loss. But usually by the time they’ve got this report, it’s already too late. The financial status of your business should be at the forefront of your mind every day- not something that you look at once or twice a year when you run out of cash.

REPORT FREQUENCY

The first thing to decide is how frequently you need to see reports. I suggest a minimum of monthly, if not weekly. This can sometimes depend on whether you have a full time accounts person, or whether they only come in once a month.

TOP TIP: DO A YEAR END EACH MONTH

To help you know what’s going on in your business, one of the first things to implement into your business is a culture of having a year end every month. By that I mean… you want to ensure that every revenue figure and expense if recorded according to the month that it’s incurred. If you insist on this type of culture, you will start to receive accurate figures. So think end of year each month and close off all financial data for each month. That way you know that your reports fully reflect the state of your business and you get accurate profit and loss reporting and it can help you to identify trends in your cash flow.

With regards to reporting, if you have a full time person looking after your reports, you should be having a weekly meeting with them to review reports. To make this process easy for you, refer to the ‘Essential Financial Management Templates’ workbook which you can purchase from our website. This workbook has a standard financial meeting agenda that will help you to guide your meeting so that it’s both effective and efficient.

When you are meeting with your accounts person, you want to ensure that you have all the reports up front -before your meeting – so that you have time to go through them and highlight any discrepancies that you can then address during the meeting.

YOUR WEEKLY REPORT PACK

So what information do you need to know if your business is doing well or not? Well your weekly report pack should consist of the following five reports (by the way, a sample copy of each of these reports is also included in the workbook that I mentioned before):

1) A Profit and Loss – this should be provided weekly (if you’re meeting weekly) as well as a Month to Date and a Year to Date report. So that’s actually three reports in total!

2) From there, you would request a copy of your Aged Payables. This report shows a list of all the people that you owe money to, and when it’s due – or if its overdue. If there are any amounts that exceed your suppliers trading terms, you want to know why. If it’s because of cash flow, you then look at your cash flow analysis report to see when they will be paid. To maintain a great relationship with your supplier, you then need to communicate this with them.

3) Another essential report is your Aged Receivables. This is where you can clearly see who owes you money and if they have any amounts outstanding to you. This allows you to follow up on collections way before it becomes overdue. As part of your financial management systems, you should have a standard follow up system. For example – if a client has exceeded their trading terms by 7 days, what happens – do you follow up with a quick phone call to check that they’ve received the invoice. If its 14 days – what happens – and so on.

If you refer to the ‘Essential Financial Management Templates’ workbook that I mentioned before, there’s also a list of demand letters designed to help you when you need to be a little more serious about collecting. But once again, Aged Receivables is essential because you need to see when your money is coming in – so that you can pay your suppliers and employees their wages without having to dip into your own personal cash reserves.

4) This brings me to the next report – a Cash flow analysis. This report should be put together by your bookkeeper and outlines when money is coming in and when it is going out. You can then see if there are any shortfalls so that you can make plans in advance to get this covered. It may be that you need to transfer monies from another account – or it may be that you chase outstanding payments. What you don’t want is to find out when you go to transfer the money is that there’s nothing in the account!

Believe it or not, this is often the most under-utilized financial report – and yet it’s the most important. You wouldn’t believe how many bookkeepers or accounts people don’t do them either. It’s not so much that it’s difficult to produce, but it’s a working document which means that it needs to be regularly updated. But persist with this one, even if your accounts people try a mini revolt over it, because it’s a life saver for your business.

The ‘Essential Financial Management Templates’ workbook that I referred to previously that’s found on our website contains a fantastic cash flow analysis report that will save you and your team a lot of time.

5) The other essential report to have is the Bank Reconciliation. If your bookkeeper is full time, then they can do this weekly by using the online reports from your bank. If its monthly, then they will need to wait for the bank statement to arrive from the bank before they can finalise. However, keep on top of them for this – this report shows that the necessary process has been done to ensure that the month end has been closed off and that the cash in bank and any other payments or receipts are accounted for. Basically a bank reconciliation is done so that its guaranteed that your amounts coming into and out of your bank account are accurately reflected in your accounting software package.

WORKING WITH YOUR ACCOUNTANT

I would also recommend requesting that your financial controller automatically sends a copy of your monthly reports to your accountant. This way your accountant can see where you’re headed from month to month. Depending on the size of your business, you could then establish regular meetings with your accountant – whether it’s monthly or quarterly – to discuss those reports and your financial plans for the coming month.

Once you are receiving these reports regularly, you will find that you become much more empowered in your business and your finger is never far from the pulse!

7 Tips For Writing Better Business Reports

Writing a report can be one of the most difficult writing tasks we face, whether it’s for work or at school.

In my various professional incarnations over the years, as bureaucrat, administrator and private consultant, I have been required to write literally (no pun intended) hundreds of reports of just about every description you can imagine. In fact, when I did my MBA in the mid-1990s it was like a total immersion course in report writing; they seemed to be never ending.

So, to help people with their report writing I have put together a few tips that I have picked up over the years.

People often cringe at the thought of writing a “business report”. Granted, these are somewhat more complicated than business letters, but if approached in the right way, writing a business report can be a straightforward and reasonably painless process.

There are a number of different generic types of business reports including: general business report, business plan, business proposal, marketing plan, strategic plan, business analysis, project report, project analysis, project proposal, project review, financial plan, financial analysis, and others.

Although the technical content and terminology will vary from report to report, depending on the subject and industry context, the actual “report writing process” will be essentially the same. Whether it’s a short 10-pager, or a major 100-plus pager, that “process” will involve the same fundamental steps.

The following seven points are what I consider to be the essential steps for writing any business report. Follow these steps carefully and you won’t go wrong.

1. Confirm Exactly What The Client Wants

This is a very important initial step. Whether the client is you, or someone else, be sure that everyone is talking about the same thing in terms of final outcome and expectations. When determining this, always think specifically in terms of the final deliverable (usually the final report). What issues must it address? What direction/guidance is it expected to give? What exactly will it contain? What bottom line are they looking for?

2. Determine What Type Of Report Is Required

This is another very important initial matter to clarify. There are a number of different types of business reports. Although there is usually overlap between the different types, there are also important differences. For example, do they want: a business plan, a business proposal, a strategic plan, a corporate information management plan, a strategic business plan, a marketing plan, a financial plan, or what? Know exactly what type of final report is expected from the outset.

3. Conduct The Initial Research

Once you know exactly what the client (or you) wants, and the specific type of report they are looking for, you are ready to conduct your initial pre-report research. This stage may be as simple as collecting and reading a few background documents supplied by the client, or it could

involve developing questionnaires and conducting detailed interviews with the appropriate people. It will vary with each situation. The Internet of course, can really simplify and shorten the research process, but don’t forget to double and triple check your sources.

4. Write The Table Of Contents First

In my experience, drafting the Table of Contents (TOC), before you start writing the actual report is the single most important key to developing a successful business report. This document can normally be done before, or in parallel with, the first phase of project information gathering. This should be more than just a rough draft TOC. It should be a carefully thought out breakdown of exactly what you imagine the TOC will look like in the final report. Although this takes a certain amount of time and brain power up-front, it really treamlines the rest of the process. What I do is to actually visualize the final report in my mind’s eye and write the contents down. This really works! This TOC then becomes a step-by-step template for the rest of the process.

Sidebar:

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If you are writing the report for an external client, it’s a good idea to present the draft Table of Contents to them at this point in the process and get their approval. This will force them to think it through and confirm what they really want at this point. Once they have agreed to a TOC you will have their “buy-in” for the rest of the process, therefore significantly reducing chances of any major changes or reversals at the final report phase.

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5. Do Any Additional Research

After thinking through the TOC in detail, you will know if any additional research is required. If yes, do this extra information gathering before you sit down and start to actually write the report. That way, once you begin the writing process you will have all of the information needed at hand and you will not have to interrupt the writing process to conduct any further research.

6. Create The Skeleton Document

A trick I always use when working with MS-Word is to create a skeleton document first. That is, before you actually write any of the text, enter the entire Table of Contents that you have already developed into MS-Word (see Point 4), heading by heading, including sub-headings. At this point, the document is essentially a sequential series of headings and sub-headings with blank space between them. Then, have MS-Word generate an automatic Table of Contents that exactly matches your planned TOC. You’re then ready to start filling in the blank spaces after each heading and sub-heading in the body of the document, with text.

7. Write The Report By Filling In The Blanks

That’s right, by filling in the blanks. Once the TOC skeleton framework is in-place as per the previous step, writing the actual report becomes almost like filling in the blanks. Just start at the beginning and work your way sequentially through the headings and sub-headings, one at a time, until you get to the end. Really. At that point, with all of the preparation done, it should be a relatively straightforward process.

If you follow the above steps in the “report writing process” you will be amazed at how quickly your reports will come together. Give it a try – it really works.

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