Regular ongoing review of key financial indicators is a critical part of the strategic planning cycle of any business.
Proper, timely, financial reporting on a monthly basis should be one of the first things that a business has in place. With a multitude of cost effective, easy-to-use and intuitive accounting packages now available (such as Xero) it is much easier for businesses to have a daily understanding of their financial position.
To be effective, financial reports must be combined with an allocation of time to review performance, preferably against budgets. Where appropriate these reviews should include key staff or advisors. This process can be enhanced by using a standard reporting template outlining the business’s key financial indicators that should be managed on a regular basis. This would include areas such as sales growth, debtor collection, inventory control, margin management etc.. Businesses will then be able to quickly identify any issues that may require adjustment in the following month, ensuring financial performance remains on track to meet expectations.
Steve Wilkinson – The Alternative Board Christchurch and North Canterbury
The Alternative Board provides peer to peer business advice and planning as well as business mentoring and coaching to support NZ Businesses.