It is common to see small businesses and startups handling their financial reporting and analyses in messy spreadsheets that may get updated once or twice a year, but it is difficult to gain insights when operating this way. To fully understand the business, financials need to be timely, accurate, and engineered in a way that the primary users can absorb the most information and gain the most insights into their business.
Having a smooth and regimented financial reporting process allows for in-depth reviews to take place soon after a period ends so decision makers can quickly adjust strategies. These reviews can also be used to identify bottlenecks in processes or redundant expenses that can be cut out and save the business money.
Here are a few ways to improve the financial reporting at your business:
1. Implement a Modern Accounting Software or ERP System
The use of a modern accounting software or ERP system allows for real-time financial data. This enables decision-makers to have the latest information at their fingertips, aiding in quicker and more informed decision-making. These systems also provide the ability to automate accounting and reporting processes, saving you valuable time.
2. Improve the Chart of Accounts
A proper chart of accounts allows for accurate categorization of transactions and reporting consistency. A well-organized chart of accounts also streamlines reporting processes and creates more organized financial reports.
3. Forecast and Budget Tracking
Integrate forecasting and budgeting into your financial reporting process. This allows businesses to set realistic financial goals and forecasts, track performance against these goals, and adjust strategies accordingly.
4. Key Performance Indicators (KPIs)
Incorporate relevant KPIs and operating metrics into your monthly financial reporting to provide a quick snapshot of the business’s performance. This helps in focusing on the critical metrics that drive success and facilitates a more efficient review process.
5. Customization for Users
Tailor the financial statements to the needs of different users within the organization. Executives may require a high-level overview or summary, while department heads may need more detailed information and account breakdowns. Customizing financial reports ensures that each person gets the insights they need.
6. Monthly Financial Reviews
Schedule monthly meetings to review the financials. Implementing a formal monthly review will ensure that you are identifying trends, tracking performance, and making informed business decisions.
Our Experience
CFOx recently helped a rapidly growing mortgage company set up a new accounting system and establish their financial reporting processes and deliverables. Given the company’s growth, the owners needed to improve their visibility into the business. Read more about how we helped here: Accounting System Set Up and Financial Reporting for a Mortgage Company | CFOx (cfoxadvisory.com)
If you would like to learn more about our Financial Reporting services, please reach out via email ([email protected]) or schedule a call via the Contact Us page on our website.
