Most business owners feel intimidated by their company’s financial reports. Some find P&Ls, Cashflow Forecasts and Balance Sheets difficult to understand, especially when determining how the reports fit in with how their company is doing. Because of the amount of variables needed to run a financial report, they’re often a historical snapshot instead of what’s going on with a company real-time. Financial statements often have accounting-related adjustments that don’t often make any practical sense to a business owner.
What most business owners don’t realize is that there is only one report they need and it’s not part of their financial statements. Banks look at financial statements to approve financing. Business owners look at a daily or weekly snapshot of how the company is doing and it’s called the Flash Report.
The beauty of the Flash Report is that it’s a one page, daily or weekly snapshot showing the most important information a business owner will need to run the company effectively.
The vital numbers are on the single page: cash in the bank, year-to-date revenues, and all open accounts receivable and accounts payable. Other numbers depend on the type of business and can include inventory levels, year-to-date expenses, employee billables for the week, forecasted sales, returns, losses and even nonfinancial details like growth in company Facebook page likes or number of customer complaints.
As a business owner, craft a flash report with the details of what matters most in your business. An accountant is not required to generate the report. A bookkeeper or organized, administrative person could build a Flash Report. In larger organizations, the person in charge of the report is likely the coordinator, receiving reports and figures from different departments like sales, marketing, social media and warehouse operations. Streamline a plan so that all departments forward their numbers regularly to keep the report updated. The report should take a few minutes to complete.
Run the report daily or weekly as a quick overview of where your business is headed and where you want it to go. Those are your numbers designed to quickly show the health of your business. They report is simple enough that you can share its findings with partners, accountants or investors off the top of your head.
Tips on creating an effective Flash Report include:
- Keep it simple! No charts, graphs or color coding required. It can be handwritten, a quick spreadsheet, a simple email, or whichever format is most easily digestible.
- Make sure that the three most important factors are covered in the Flash Report: liquidity, profitability, and productivity
- Keep the time period short. The report should run for a period of one week, at the most.
- If the report takes longer than half an hour to put together, it is too detailed and complex. Remember that it’s called a “Flash” report.
- Keep the report on file. You’ll need the numbers to track benchmarks.
- Benchmarks are an important component. The numbers in a Flash Report are useless without something to compare to. It will take a little longer at first to put together previous figures. But if you keep daily reports on file, benchmarking will get easier.