Owners and CEOs often time aren’t leveraging their monthly financial data effectively
Ask yourself this question – is our financial review of the business each month effective or is it stale? If it has become stale, you’re missing an enormous opportunity to leverage your data to gain strategic insights and help you build company worth that will one day help you sell your company and achieve a euphoric outcome.
Here is what a stale/ineffective monthly financial review process looks like:
- Your controller or bookkeeper sends you the financials without adding any strategic insights from their perspective.
- Your monthly financial review pertains to the current month only compared to prior month or last year only and not compared to much else
- You aren’t seeing trend lines reflecting the past 3 years for your revenue, gross profit, SG&A and net profit
- You aren’t tracking your trailing 12, 24 or 36 months revenue and gross and net profit
- You aren't tracking actual performance to a well prepared budget - the budget was developed as more of a math exercise than a true strategic financial plan
- You aren’t updating a monthly forecast that projects the balance of the year
- You aren’t reviewing a forward rolling cash forecast
- You aren’t sitting with your leadership team each month and reviewing the graphs/charts related to the most recent performance of the business
- Your financial review of the prior month isn’t taking place until the 3rd or 4th week of the new month
Your financial data, if leveraged effectively, will help you and your team gain strategic insights about your business each month. These insights can help you in decision making and in driving improvements to your company. Talk with your leadership team about how effective your monthly financial reviews are for yourself and each of them….now is a good time to identify opportunities for improvement.
