Timely financial reporting is an important practice for any business. But being timely isn’t enough; your reports must also be accurate and complete if they’re going to be of value to you and your finance team.
Striking this balance between punctuality and precision can be difficult when you’re a busy leader, but it’s important for the financial health of your business. To help you, we asked a panel of Forbes Finance Council members how businesses can develop an efficient financial reporting strategy. Their top tips are below.
1. Get Your Accounting System Set Up Correctly
Regardless of the accounting system used, too often companies fail to accurately set up the system to maximize its value. These systems are made to generate useful data whenever you need it. Failing to integrate the system with your business leads to poor information. Have a reputable firm help you set this up and then perform a diagnostic every so often to ensure things are running smoothly. - Chris Tierney, Moore Colson CPAs and Advisors
2. Make It A Nonnegotiable Priority For One Team Member
Accurate and timely financial reporting is key. It serves as an early warning sign for your business’ health, but most businesses have late or low-quality books. My solution: Make it an explicit, nonnegotiable part of one internal member of your team’s role, and specifically track timeliness as part of their individual key performance indicators. If you make it a nonnegotiable priority, your team will follow suit. - Carrie McKeegan, Greenback Expat Tax Services
3. List Out All Month-End Tasks, Owners And Sign-Offs
Institute a month-end close calendar that lists all tasks, task owners and sign-offs. Assure that tasks are completed within a certain time frame, aligned in chronological order. This should complement an on-time, in-full, no-error (OTIFNE) month-end close. The tracker should be steered by an F&A team leader to maintain an up-to-date status on progress and risks and prompt, timely financials. - Geanette Rodriguez-Ojeda, ARRI Rental US
4. Know The Close Calendar
Be a part of the conversation with the controller and know when the books are officially closed. There is a lot of data that is final before the close is complete. Coordinate your reporting with the close. Do the same for all nonfinancial metrics (e.g., sales, bookings, pipeline). Then get agreement from all data owners and have a reporting calendar that they sign off on. - Aaron Spool, Eventus Advisory Group, LLC
5. Regularly Review Your P&L, Cash Flow And Balance Sheet
You won’t have time for anything else if you try to track and review every single financial aspect of business each month or quarter. Focus on three main statements: your profit and loss, cash flow, and balance sheet. This will ensure you understand your financial position, sales expenses and how changes in business have affected your liquid assets. - Jared Weitz, United Capital Source Inc.
6. Log Every Dollar Coming in And Going Out
Even if you think it’s a small, inconsequential purchase, log it if it comes from a business account. This includes payroll, employee benefits and any business expense. You should also record revenue and net profits. You can use tools like QuickBooks every day for accurate reporting. Recording everything is crucial if you want to bring investors in because they’ll run if something doesn’t add up. - Jeff Pitta, Medicare Plan Finder
7. Identify The Statistics That Move The Needle
KPIs should be identified early on for any business of any size. If you don’t have “official” KPIs yet, then figure out which statistics truly “move the needle” for your business. Build a spreadsheet and start tracking them daily, weekly, quarterly and yearly. This information will prove priceless! - Tim Clairmont, Clear Financial Partners
8. Ensure Real-Time Access To KPIs
Every company should have its KPIs, including financial metrics, on a dashboard that is easy to update and navigate. With the proper system in place, you can see where you stand right now, on this day. Looking back at the past year—lagging indicators—you might not know the reality until a quarter or two later. - Bill Keen, Keen Wealth Advisors
9. Hold Regular Accountability Meetings
Develop a regular schedule with your financial advisor. Now is the perfect time to set the tone for the year. Set monthly meetings and quarterly recap meetings. These will keep you and your financial advisor accountable—plus, you will know your numbers! Schedule meetings afterward with your team to update them; now everyone on your team will keep score with you. - Dr. Betty Uribe, Effectus Enterprises, LLC dba Dr. Betty Uribe
10. Don’t Try To Do It All At Once
Implementing new or updated financial reporting can be overwhelming, but the key is to not try to do it all at once. A more effective way is to make periodic updates (daily, weekly, monthly, quarterly) so that you don’t have to do it all at one time, because that can make it an overwhelming process. Eat the elephant one bite at a time. - Noah Brocious, Capital Fund I LLC
11. Closely Analyze Historical Figures
Outsourcing the work to a certified accountant is the simple answer. But to take control, one needs to look at the historical figures closely to determine trends, risks and seasonalities. Based on what you observe, build a predictive model to forecast future projections. Finally, continuously track the actual figures against the predicted figures so you can increase the accuracy of the model. - Frans Wiwanto, Flywire
12. Analyze Month-Over-Month Trends
Take the extra step in your financial reporting and perform a month-over-month trend analysis to detect any data anomalies and to determine if any other indicators stand out. Look beyond the income statement and factor in the cost of goods sold and other regular monthly expenses. In doing so, you’re more likely to spot a trend before it becomes an issue and adjust strategy accordingly. - Ben Gold, QuickBridge Funding
13. Leverage Predictive Technology
With even a basic accounting system, businesses today can easily generate timely, accurate reports on current financial health. In today’s fast-paced, competitive environment, however, it’s critical to know not just what’s happened in the previous period, but also to understand likely performance in the next. That means combining predictive technology with available data to forecast future performance. - Jared King, Invoiced
14. Automate And Review
Automate your accounting and keep business records in order. At the start of the new year, take the time to plan and ensure all your records are up-to-date. There are plenty of online accounting systems and accessible advice available. Most small businesses can do well with the simplest of systems, right out of the box. - Luz Urrutia, Opportunity Fund
15. Outsource Or Hire Someone To Tackle Financial Reporting
Outsource your financial reporting or hire somebody dedicated solely to this task. As the business owner, you need to see a list of reports—such as financial statements, balance sheets, cash flow statements, etc.—on a monthly basis. However, the key is to identify and understand the KPIs of your company’s financial reporting. Then use these and other KPIs to improve your business. - Justin Goodbread, Heritage Investors
