BLOG

How many lead guitarists does it take to change a lightbulb?

 

….. One, but I could have done it better”.

 

Most accountants think they are good at management reports, and that’s cool, I just wanted to share what I’ve learned about good management reports over the years. Thank you for indulging me.

 

Good management reports should:

1) bring clarity to the nature and scale of your operations – so that someone, with some financial experience but not familiar with your business, could easily see what you do. Not an easy task. Not a long alphabetical list, alphabets are for toddlers and archivists.

2) set up a standard conceptual framework that suits your particular business, with standardised language, that is widely understood by stakeholders – that allows you to track operational performance in detail for internal use as well as form the base for regular, summarised, reporting to external stakeholders

3) show each major income stream, some recurring, less associated direct costs

4) show qualities to allow calculations like average revenue, CAC and LCV

5) allow you to be see trends in key revenue and costs, in each stream, to allow you to make decisions based on growth assumptions

6) let you see any variances quickly to fix problems

7) be able to report on any time frame – its best to always use the same report but be able to change the timeframe, or to focus just on one income stream – but the format stays the same so people understand it. Think of it like tags in a database.

8) include robust revenue recognition calculations and audit trail (and accurate matching of associated costs). Accounting at its core is matching revenue and costs for a particular time period.

9) robust reconciliation to Xero each month with an audit trail

10) form a base for financial forecasts based on sales pipelines

11) form a base for cashflow forecasts.

 

 

Photo by Sam Moqadam on Unsplash

Recent Posts