My last blog was an introduction to the principles of daily, hands on reporting and analysis which give you a feel for your business. The next level of reporting, weekly reports, allows you to not only know your ‘business heartbeat’, but to monitor it.
The following reports should be reviewed on a weekly basis:
The balance sheet is a summary of what is happening in the business. Nothing can hide from you. The figures that you see every day should be telling you a story and at the end of the week that story should be reflected in the balance sheet.
In order to achieve successful business growth, you need to understand what money is available. You also need to know whether you are running the business as effectively as possible and if not, where adjustments can be made. The profit and loss report reflects income and expenditure, offering a complete overview of the businesses circular flow. You must be sure that this report is correct and you understand every balance.
You must review this report very carefully, page by page. It is the heart of the beast and you should understand every balance. You need to recognise the companies that owe you money in order to make effective collections. Straightforward and quick to read, the aged debtors report highlights potential revenue. Without the knowledge derived from this report you cannot put systems in place to successfully obtain this income.
My personal preference is to export the report into Excel. In Excel data can be manipulated and filtered alphabetically, numerically, in date order, etc.
Again, this is a report which should be reviewed page by page. It is important for every business to understand what it owes its creditors. The aged creditors report presents you with information which can aid negotiations such as settlement discounts and increase buying power. With growth so intricately linked to cash flow, this report is vital for successful business development.
You must review and ensure that the balances on the bank reconciliation agree with the balance sheets and bank statements. You must have a clear understanding of these figures and any reconciling items which appear. If you have transactions outstanding for a long period of time, it is extremely difficult to forecast accurately. And if your bank reconciliations are not up to date your reports are effectively useless.
Review this and ensure you have seen all the bank reconciliations. Ensure the debtors control and creditors control balances agree to the aged debtors. The trial balance is the thinking mans report. It offers a complete business overview.. It also gives you a control check that the other reports are correct. The bank reconciliation, debtors age analysis and creditors age analysis balances must tally to the control account. If a problem occurs then your age analysis and bank account is not correct and as a result you will be unable to successfully manage your cash flow.
If you are struggling to keep track of your organisations finances take a look at your reporting processes. Taking just a few minutes to analyse the figures each week could make a world of difference.
The next step is monthly reporting. Look out for my final reporting blog, focussing on monthly report processes, next week.
Sage 200 Product Manager