If you took a poll to find out which financial reports businesses most frequently use to monitor their performance and decision-making, you’d probably get hundreds of answers. But if we drilled deeper into the questioning, we would probably start seeing the 80/20 rule take effect. In other words, 20% of a company’s reports are used for 80% of performance monitoring and decision-making.
So, which reports would you say are the top 4-5 that truly help you get the FULL picture (albeit at 10,000 foot level of what is going on with the company)?
1. Profit & Loss Report with all the typical columns (current month actuals, last month, last month prior year, budget, year-to-date, etc.)?
2. Balance Sheet?
3. Cash Flow?
4. Narrative management summary report?
5. KPI/Scorecard report for the top metrics?
6. Sales report showing e.g. the top 50 sales transactions for the month?
7. Payables report showing e.g. the top 50 payments made this month?
8. Receivables report showing e.g. the top 50 aging receivables?
9. Graphical trend reports or dashboards?
10. Other reports?
Assuming you have a set of “favorite” reports that you and your managers consistently use to help manage the company, here are the next questions:
• Do you have the technology to produce all of these reports as part of an automated process, or is it a manual process to pull everything together and to deliver it to your management team?
• Do you have a process to capture the discussions once managers have reviewed the reports?
• Do you have agreed upon thresholds in your report package that can trigger management ACTIONS based on the thresholds (for example, if free cash flow passes a certain level, a manager can make a certain investment without delaying the decision with approvals and meetings)?
Hopefully this could spark ideas for anyone trying to put together the “ultimate” management report package.