I’m sure, in life, there are plenty of occasions when perfection has a role to play. In management reports less so.
What managers of any Agency want to know, as quickly as possible, is how is my business doing?
So, what is more useful to an Agency? A good set of management reports delivered quickly after month end or a marginally more accurate set delivered a week later?
It’s a rhetorical question obviously. More important is how do the CEO and FD work together deliver the right information at the right time? Here are a few ideas;
- Make sure there is a robust revenue forecast. If the business doesn’t take it seriously problems will end up with the Finance department to sort out which will take far longer. If it is a priority for the CEO it’ll be far more accurate far earlier.
- Most of the tricky assumptions are about revenue. By contrast most cost assumptions in an agency should be a little more straightforward and can be made quickly. Salaries are usually paid before the month end so will be known; freelancer days can be counted and costed; overhead categories should be relatively stable with sensible judgements about any one-off costs.
- Finance Directors by nature don’t like to guess but a report based purely on best estimates gives them licence to talk earlier about likely outcomes. With an accurate forecast they should be able to provide a “Flash” P&L far earlier than the normal one. 80% of the benefit for 20% of the effort.
All CEOs should know that their monthly P&L is not 100% accurate – it is the end result of many assumptions but with the right preparation it is possible to get a pretty good picture of how your
Business is doing. Then you can get onto the interesting stuff – the hows and the whys.