The make up of a strong monthly business reporting package

May 29th, 2009

What does a strong monthly reporting package look like? It certainly goes beyond a basic set of financial statements (Balance Sheet and Income Statement). But that doesn’t mean the process obtaining better insight into your business has to be complicated. 

Generally speaking, a good reporting package should consist of the following:

  • Balance Sheet and Income Statement
  • A Statement of Cash Flows
  • Loan agreement term (“Covenant”) test
  • Divisional/Line of Business Income Statement
  • Key Performance Indicators
  • Commentary and analysis

Every business has unique requirements, so you can’t necessarily create a blanket solution for every case. For instance if you don’t have existing loans, you won’t need to test your loan agreement terms. If you operate a single division there is obviously no need for multi-divisional reporting. 

Personally, I recommend preparing your monthly reporting package in Excel with two versions: One for the internal audience (management) and another for the external audience (usually a bank). Management requires more information than a bank would, so I typically limit the external version to include a Balance Sheet and Income Statement only. 

Using Excel for both the internal and external reporting package forces a ‘lock down’ on your numbers for the month, and provides your accounting personnel with a finishing point to the period.  I typically encourage accounting staff to email me the final Excel reporting package when it has been reviewed and completed.  Preparing this package in Excel also allows for further analysis and commentary (such as a report of your Key Performance Indicators) within one document which can be saved for future reference. 

To effectively operate a business with revenues exceeding $7-$10 million it becomes a requirement to go beyond your basic financial reporting- and it should be prepared for you within a reasonable time period (no more than 15 days after month end).

If you have a need for higher quality information, and are not getting it, don’t settle for less. Ask your accounting staff if they can prepare something like the reporting package suggested above. Your path to better business performance depends on it.

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