Timely Financial Information Improves Performance
Timely financial information and analysis is essential for making informed decisions, evaluating your company’s results, improving financial performance and ensuring you are on the path to meet your strategic goals. Harnessing your financial data and aligning it with your company goals is easier than you think but often it is not given the priority and focus it deserves.
In many cases, we find companies have the necessary information, but the delivery is all-too-slow, with the relevant data hitting the decision-makers’ desks two to three months after it was truly needed.
It’s a lost opportunity, and those companies are not optimizing a key resource – financial information that offers valuable insight into customer behaviour, operating performance and resource allocation.
There are a few steps we recommend in order to grab hold of the right data, turn it into insightful analysis and information and get it to the management table in a timely manner.
Take What You Can Get
Before companies begin scurrying madly to overhaul their business processes, we urge them to take a step back and look at ways to maximize their existing systems. We calmly tell those firms – “Start by taking what you can get.”
It’s a step towards enhancing your visibility. In truth, you probably already have access to data related to your customers, suppliers, staff performance and overall business objectives.
Just take what you have and create a process to get it to the management table faster. No more two to three month delays. Deliver monthly financial and operational information in one week, before it becomes stale. Additionally, identify the information you need and can deliver daily or weekly.
Identify What You Need: Establish Dashboards and Metrics
Once you have taken what is available, identify what critical information is missing for effectively managing your business. Specifically, companies must establish dashboards and metrics that are aligned with the company’s goals, focused on those areas within management control and measure the desired outcomes.
We often find that the financial systems are capable of capturing the data, however, many companies have not optimized their processes to record and extract the information that is of the utmost importance to the management of their business. In cases where the systems cannot provide the information, companies need to establish manual processes and reports to capture and manage critical information.
It’s not enough to simply create those dashboards and metrics then leave them as informal tools. Smart companies create daily, weekly and monthly schedules for providing information to the management team where the reports are reviewed, opportunities and risks identified and actions taken to continue to improve business performance.
Automate Your Processes
This may seem a simple bit of advice but in fact, many companies do not leverage the financial and operational systems in which they have invested significant time and money. Automating your processes can be the fastest way to create timely information, and it also frees up staff to work on more value- creating projects. Align your processes to deliver key information and eliminate nice-to-have and unnecessary work.
Furthermore, evaluate the benefits of accuracy vs. timeliness. Sometimes, dotting the i’s and crossing the t’s isn’t a priority.
Timely information allows you to seize opportunities and take corrective action that will improve profits.
Focus on Forecasting
With improvements to timeliness of reporting financial performance, companies can now put greater efforts toward improving visibility by preparing timely forecasts of operational results and cash flows. Forecasting is a key pillar in a company’s short and long-term financial performance.
With a forecast process in place, a company’s performance and cash flow are managed in a thoughtful, proactive manner rather than as a reactive game of financial catch-up.
Don’t Forget Your Most Important Asset – Your People
We’ve talked here about financial data and information processing. But smart organizations never forget one fundamental truth. Namely, that none of this happens without people.
Even the most efficient and organized processes only work if you have the right people in place – the ones with the skills and experience to understand the importance of timely data, then effectively identify, analyze and present it so it advances your business goals.
As companies grow, it will mean changes to the organizational structure as new skills, expertise and talent are required in order to support and manage growth. In some situations, it may mean replacing or repurposing talent. This is often a difficult managerial decision to make when the job requirements have outgrown a person who has been a long-standing and valued employee.
Your organization must understand that financial reporting is a priority. Financial goals and metrics must be aligned throughout the organization, accountability assigned, tied to compensation and performance, regularly reviewed and managed. It’s an essential part of “guided growth” – creating the team and organizational culture that will automatically harness the data for results.
Leveraging Financial Data for Better Outcomes
Delivering timely, quality financial data is not impossible. It can be challenging, especially as your business grows beneath you, but it’s important to stay on top of it and ensure your business strategy produces the outcomes your shareholders demand.