Understanding your numbers – the benefits.
During a recent meeting with one of our clients, they told us they wished they had more time to devote to strategic business planning. The client recognised that the financial side of their business was important but just never seemed to carve out time to reflect on performance and consider strategies to improve.
As we chatted about potential options, the client agreed that they’d like to try our management accounts and see if this helped them to focus a little more on the long term strategic goals of their business. Together we agreed what metrics were important for the business and in this instance, we settled on turnover, profit and cashflow. We produced a profit forecast by month and then a monthly reporting pack which showed exactly how the client had done that month compared to the forecast, the previous month and also the same period last year. We highlighted a potential cashflow shortfall for the following month and suggested ideas to remedy.
We included lots of visuals in the pack so that the client could understand quickly whether they were on track or off track. We also provided not only numerical analysis but also the ‘so what’ which is all too often overlooked and which is vital if the numbers are to drive change.
The client immediately realised this was extremely valuable and said it was something they wanted to receive each month. They are now the happy recipient of a monthly pack which promotes discussion and debate and is the instigator of positive change.
Many businesses don’t realise the benefit that understanding their numbers on a timely basis can bring. The types of areas we can help you to look at here at Greenhalgh Accountancy are:
How is profitability currently being measured – how should it be measured?
Are you tracking each separate area of your business and able to identify what contribution it makes?
Is your gross margin where it should be and what can you do to improve it?
Should you be rethinking your sales price strategy or managing your costs more carefully?
How solvent is your business and are you collecting cash quickly enough from your sales to ensure all of your expense are covered?
Although the above may seem daunting at first, we have a proven track record getting non-finance professionals to understand key data which then aids with decision making. We do this by explaining our point clearly without the use of technical jargon and often use visuals for those who are not keen on numbers.
We can produce management accounts or cashflow budgets either as a one off exercise or on a quarterly/monthly basis. If your business would benefit from this type of help, then please get in touch.