Connections for Success

 

06.24.20

Three Ways to Put Your Financial Reports to Work
Chris Arndt

Our favorite type of client? One that has been growing so fast that they have not had the time to really put their financial reports to work. There is so much room for improvement in a company that is already growing but does not yet know how to glean value from its financial reports.

Get Your Managers Involved

Step one to put your financial reports to work:  Involve your team and curate a culture for growth. Be transparent with your numbers, so that your team can learn how they can control and affect your company’s financials. By involving the relevant department managers, you can increase tactical decision-making, collaboration and buy-in.

  • Educate your team on how to read financial reports. Start with the P&L statement first – money in, money out – then move on to the balance sheet.
  • Make reports available to your team so they can optimize costs, properly forecast and budget per line item.
  • Make it easy to read the reports. We recommend internal reports with simplified financials.
  • Offer incentives for hitting the targets for which you have budgeted. Put a name next to each P&L and balance sheet account to create ownership and accountability.

If you are a manufacturing company, for example, bring in your warehouse manager in charge of all employees who fulfill orders and teach that manager how to read and track those labor costs (i.e., direct labor on the P&L statement). Offer incentives for hitting certain benchmarks. The manager can then focus on making the team more efficient (e.g., by sending out more shipments with the same amount of people). Your company is now operating more efficiently and your manager can track that success; plus, the manager receives compensation for helping the company scale.  It is a win, win.

This transparent approach to your financial reports facilitates a paradigm shift where managers will no longer be pestering employees to work harder, but instead, highlighting missed rewards. The focus is on opportunities, not threats.

Optimize Reports Using Integrated Cloud Solutions

Put your financial reports to work by integrating and automating your systems as much as possible. You can then access the data you need in real-time and rely less on Excel. One of the biggest value-adds of integrated systems is having live dashboards of data that show you, to the minute, how the business is doing.  Not just dashboards that give you the big picture, but interactive dashboards that are hyperlinked to drill-down on the specific details of metrics and give you a better understanding of your company’s financial health

For example, take a SaaS business that is tracking a recurring revenue metric from last month compared to the current month. On an integrated dashboard, they can drill-down directly to the recurring numbers and get detailed insight into the customer acquisition, retention and churn.

If your company is on the smaller side, integration might include a few different cloud solutions synced to reduce data entry, but still provide you with real-time access to expense reports or outstanding accounts receivable. If your business is larger, you may find value in a more robust solution like NetSuite. 

Related Read: Not sure what cloud solution is right for your high-growth company? Here are three reasons to switch to NetSuite.

Our client, Habib Salo, CEO of Young Nails commented specifically on this topic, noting that thanks to the NetSuite integrations, “data is accessible. To drive growth –  especially our marketing efforts – having data is not an option, it’s an absolute necessity.”

Use Your Data to Scale

You cannot grow what you do not know (it rhymes and it is cheesy, but it is true). How can you prepare for growth if you do not have the tools to do so? Growth ratios tell you how fast your business is growing. For instance, we know we need to hire a new person to our Cloud CFO team for every four new clients that we win.

Do you know your customer acquisition cost? How many new hires do you need to make per acquired customer? We love a forward-thinking approach to financials and these benchmarks can help you make better business decisions for your future.  

For example, a not-for-profit that operates a fund knows that for every 20 grants they offer, they need to hire one new program manager to oversee appropriate spending and use of grants by the recipients. In a not-for-profit world where they want to create more impact, they know exactly how much capacity they have to provide more funding and services by using their financials to chart their future. They can easily link their metrics to their mission.

No matter what your industry, if you are not squeezing your financial reports for all they are worth, you are missing a huge opportunity to set your business up to scale.

Need help setting your reports up to shine or knowing which type of incentives to offer? Start a conversation with us today. 

For more information, contact Chris Arndt at carndt@orba.com or at 312.494.7014. Visit ORBA.com to learn more about our Cloud CFO Services. 

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