Get On Top Of The Business With Good Management Reporting – Corporate Governance

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Running a business is, as every entrepreneur will testify, a time-consuming job – it is all too easy to get bogged down in the day-to-day running of that business. It is important to regularly take a step back and understand the bigger financial picture. Management reporting can help you do that, says James Johnson.

Up-to-date financial information is critical for a business owner. It helps inform and shape business decisions while keeping an eye on cash flow. And in continued uncertain economic times, that has never been more important.

Businesses today have one major advantage over those from a decade ago; online accounting platforms, such as Xero and Quickbooks, make this information readily available.

So what are the essential pieces of financial information business owners should look for in their management reports?

Here are my suggestions for weekly or monthly management reports:

  • Debtors and creditors. Keep on top of what the business owes and what it owes. Chase those outstanding debtors to maintain a healthy cash flow.
  • Stock levels. Are you holding too much or too little? With challenging supply chains, this is tricky, but holding too much will tie up cash that might be needed elsewhere.
  • Businesses will have varying levels of debt and borrowing, from plant and machinery, vehicles and Covid borrowing. Can the business maintain repayment levels? If not, can they be restructured?

Business owners may also want to look at other financial measures, perhaps on a quarterly basis. These might include:

  • Employment costs. The cost of living crisis is pushing up wages. Consider what impact this might have on the bottom line?
  • Profit margins on sales. As the cost of materials, supplies and distribution increases, businesses will need to keep an eye on profit margins, and may wish to consider price increases to reflect that.
  • Sales to new customers and repeat customers, allowing you to tweak marketing activity accordingly.
  • Customer satisfaction scores, highlighting potential areas of weakness.

Now is the time to be on the business and not just in the business.

If you’d like help improving your financial information, contact James Johnson on the details below. Take advantage of our free consultation to understand your business goals and set you off in the right direction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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