Monthly performance review is best practice
Business Advisory Services Update
The preparation and analysis of monthly financial accounts for individual activities comprising Profit and Loss, KPIs and comparison to Budget Report enables the leadership team to review the performance only a few weeks after the end of each month. If there is a problem, it can be investigated and fixed before the problem continues to affect the performance of the business for the full year.
The Balance Sheet for the business is a very important document which should be analysed each month, to determine why variations from the budget occurred, ensure that the “Key Driver Subaccounts” are reviewed and necessary rectifications are implemented.
Some of the concerns within the Key Drivers could be debtors. The balance needs to be evaluated to prepare the “Debtors Days Outstanding” calculation. If this figure is higher than the budget estimate for “Debtors Days Outstanding”, prompt follow-up action can be taken.
Whilst examining Debtors, a review could be made to ensure that if the directors have decided that the business should be proactively registering some customers on the Personal Property Securities Register (PPSR), that this decision has been implemented. Failure to do this could be very costly.
The “52-Week Financial System” is based on what happens in the majority of large businesses, whose Directors and Chief Financial Officers have determined that the prompt preparation of financial reports and a monthly review process is the best way to operate a business.
Many of the businesses operated by large companies compete with SMEs. It is beneficial that SMEs are implementing a similar Financial System 52 weeks of the year to what large businesses are doing.
To ensure that this process works effectively, the vast majority of SMEs will need strong assistance from their Accounting Firms.
ESS BIZTOOLS has developed a system to assist Accountants to implement these types of services, without having to spend hundreds of hours in preparing forms and procedures. To find out more, contact our Managing Director, Peter Towers, on 1800 232 088 or email .
