I’ve talked about how not to run your finances, so now it’s time now to look what great control and information does look like.

When things don’t seem to be working in your business, it can be hard to know where to start, and how to pinpoint exactly what the biggest problems are.

Getting X-ray vision

Because great financial information is the mirror into your business, it gives you a kind of x-ray vision to see what’s really going on, what’s working and what’s not.

This enables you to quickly home in on the most pressing problems and it acts as an early warning system, giving you advance notice of problems coming up.

There are always changes and challenges in any business – that’s just life!

Having great financial control and visibility shows you how to keep improving your business:

  • How to improve that gross margin by another couple of %
  • How to maximise your sales
  • How to improve efficiency
  • How to consistently make good profits

If you do all these things while building financial strength and growing the value of your business, you know that one day, you have the option to sell if you want to.

Have control and know you have control

This comes from having solid financial management information that tells you everything you need to know, in a simple format and using clear language that you understand (after all it IS your business).

Weekly cash flow forecast

Unless you’re awash with cash, a 13-week rolling cash flow forecast is an excellent discipline – and is something you should make sure you see every week.

If you don’t see it every week and engage in it, it tells your finance person that you’re not really interested and there’s a risk they’ll stop preparing it or take less care with your money.

Debtors and creditors

I always recommend that you see your debtor and creditor reports every week. Firstly, it makes sure that your finance team are on their toes and the bookkeeping is up to date. Secondly, it gives you an early heads-up on any developing problems.

If you see a customer invoice go overdue you can give it a nudge, rather than wait until it escalates to you – when it might be too late to resolve.

And if your creditors (suppliers) start to build it, it gives you the heads up on cash flow getting tight.

Plus, it’s a really good way to stay connected to what’s going on.

Weekly flash report

The weekly flash report has superpowers and I’ve seen it transform so many businesses.

It’s basically a weekly snap-shot report that takes no more than 15 minutes to prepare, and acts as an early warning system on anything you could have influenced during the month, rather than waiting until several weeks after the month end to find something out that you could have changed, if only you’d known…

It’s designed to give you that critical visibility you need to see weeks and months into the future, giving you time to react to get a different outcome.

Monthly information – management accounts

Your management accounts report needs to include:

  • KPIs – Key Performance Indicators – those key numbers you just have to know. The pulse of your business.
  • Profit and loss, both month and year to date, compared to budget, with explanations of why income and costs are different to budget, and actions that need taking as a result.
  • A full year forecast of what profit you’re expecting to make, including your actuals to date and rest of year forecast. And your forecast needs to be kept up to date, including all known changes in the business.
  • A monthly balance sheet so you can spot changes and challenge if something doesn’t feel or look right.
  • A customer analysis that shows your key customer reliance and lets you see trends in their buying patterns quickly and easily.
  • Trends – graphs of all your key numbers. Graphs are really easy to read, much easier than pages of numbers and will let you spot straight away when something is off track, and when a blip becomes a trend.

Quarterly accounts are NEVER ok!

 Don’t let anyone ever tell you that all you need is quarterly accounts!

How could it possibly be ok to only know where you stand financially 3 times during a year?

Things change quickly in business and we need to know weekly, never mind quarterly, what our financial position is.

They don’t have to be complicated if you’re a small business, but you do need something at least every month to keep you on track.

We offer a structured step-by step approach to take any business to where it wants to be financially. Tell us your dreams, we’re ready to help you achieve them.

Book a free 30-minute call with me

If you’re ready to take action and would like to find out more, you can book a free, 30minute call with me. I promise there won’t be any ‘sell’; that’s just not how we operate – just an informal chat to see if I’m the right person to help you.

To book your call, please email Martin at martin@fwordfinance.co.uk and I’ll get back to you within 24 hours.