Monthly Reporting 1-pager

Monthly Reporting 1-pager

I have always worked on the principal with management reporting, that if I was down to my very last sheet of paper and my life depended on it, how would I convey the right message to the decision makers.

In this respect reporting is highly creative.

Management reporting, that is, not reporting compliance where accounts are prepared using common standards to remove inconsistencies from country to country and Auditors then examine the accounts to provide assurance that these standards are being followed. Compliance is more about accuracy and adherence with a historical focus. Essential and skilful, but not strategic, insightful, and future focused like management accounting.

When designing a good management report, in addition to having bullet-proof numbers you must:

  • understand the audience
  • structure the information to make it easy to understand
  • anticipate any queries and be proactive

Often existing, lengthy reports are the legacy of numerous ad-hoc requests by Directors to add a new schedule here and there. Additional information is easy to add, but nobody ever removes and then nobody has time to read and work out it is the same information, just formatted differently.  After all, there is only so many ways you can slice up an apple.

Albert Einstein once said, “If you can’t explain it simply, you don’t understand it well enough.”

To make a change to the agreed ‘one-pager’ other stakeholders input on requisite content should be sought, before issuing a draft format of what the proposed 1-pager would look like, sort of road-testing and then Directors reaching a new consensus that this new version will be the new one-pager.  Maintaining a good ‘1-pager’ then becomes an exercise in discipline, cohesion, and prioritising. If something new is proposed, something old needs to be dropped to make room for it.  Ongoing feedback and communications play a huge role here.

I love how dashboards can virtually stream information live to managers, but you must understand the correct drivers of the business to monitor. A good-looking dashboard reporting on unnecessary metrics is a waste of time.

There will always be a need to dig deeper and provide supplementary detail if required but sending this out as a standard reporting package overwhelms the end user, taking the focus away from the message you want to convey.

I have had a lot of success with the one-pager over my career. It will take a few months to change things around if you are not yet at that point, but the effort will pay dividends later. Stick to the one-pager principal and you will soon find your top-level conversations assume a more strategic flavour.

David Dillon is the President of the Virtual CFO Association.

 

The Virtual CFO Association is an elite peer network, advocating and promoting the emerging Virtual CFO sector within the accounting profession. Collectively the association currently has over 500 years of industry experience, with highly qualified and experienced specialists spread across more than 20 industry verticals. If you would like any more information regarding the Association of Virtual CFO’s, please visit our website www.vcfoassociation.com.au

Accountants ain’t Accountants

Accountants ain’t Accountants

Here’s a story about 3 kids who lived next door to each other, went to school together and got identical results in the HSC, attended cooking school together and got identical results, but on completion of their courses were then presented 3 different employment opportunities.

One got a job at the local RSL, in their award winning bistro, flipping burgers, steaks and smashing out chicken parmigiana by the hundreds, on a busy Saturday night.

Another got a job at a local Italian restaurant learning to make a mean pizza and even better authentic pasta sauces.

The last one got a job at a Michelin hat restaurant,  learning to make small, fancy tasty and expensive dishes garnished in air dried, baby Himalayan, wild zucchini flowers.

After 10,000 hours experience, each were experts in their fields.

Then one night, for fun, they decided to do a 3-way role swap.

What do you think happened?

Thankfully it didn’t actually happen. It would have been a disaster.

Another great analogy to explain the difference between accounting specialities is to look at the medical profession. People get that GP’s are generalists. Leg specialists look after legs, eye specialists look after eyes and heart specialists after hearts.

You can draw the same parallels  in the accounting profession and that’s the reason why tax people should do tax, audit people should do audit, insolvency people should do insolvency and leave the expert commercial financial management up to CFO’s.

David Dillon is the President of the Virtual CFO Association.

The Virtual CFO Association is an elite peer network, advocating and promoting the emerging Virtual CFO sector within the accounting profession. Collectively the association currently has over 500 years of industry experience, with highly qualified and experienced specialists spread across more than 20 industry verticals. If you would like any more information regarding the Association of Virtual CFO’s, please visit our website www.vcfoassociation.com.au

Will it be safe to ‘return to work’?

Will it be safe to ‘return to work’?

Wondering when we are going safely ‘back to work’ is on everyone’s mind and people are having mixed feelings. For many the fear and trepidation of catching COVID 19 is paralysing, whilst others are really missing the interaction as the novelty of WFR wears off.

A big chuck of corporate Australia is already working safely….productively and efficiently. Remotely. For this big chunk, the virus has been the ultimate in validation for Virtual working.

“A challenge for employers in the city may be the reluctance of people to return to work early due to concerns of safety in public transport, or a preference for more flexible work options now that many employees have experienced work from home.” Said ICG’s human capital leader, Greg Barnier, AFR May 5, 2020.

The technology to enable remote / virtual working has existed for many years. A psychological inertia has been the main barrier, that has rendered corporate Australia unwilling to let go of the historical ritual of gathering in a central location. Risk averse executives have been reluctant to rock the boat. Ego driven executives enjoy the prestige of a corner office.

But much like Y2K forced the corporate world to re-think and embrace IT, COVID 19 has similarly forced them down the road of virtual working. A path they probably wouldn’t have gone down left to their own devices.

And the verdict?  If your company can survive the biggest crisis in a lifetime (that they wouldn’t have otherwise) by adopting virtual working, why would they revert to the ‘old normal’. When they now have proof that being in close proximity to each other every day isn’t actually the driver of performance that was previously accepted, why would they force employees to go back? When all of the benefits of virtual working have now been discovered why would you force staff back into the ritual of daily commuting and hand back all those benefits?  And why would companies risk the health of their employees and why would they continue to rent thousands of square meters of commercial office space for no measurable financial gain?

In future face to face collaboration needs to be justified,  planned, purposeful and productive, if not work from where ever you like or wherever you need to. Travelling 2 hours a day because ‘we used to before’ is no justification.  Surely the balance between  frustration with ‘new normal’ and the benefits of the new normal would be no worse than 50/50.

Virtual working at the current rate of adoption will give our transport infrastructure the equivalent of a huge boost in capacity that would have cost many, many billions. The crisis has been like winding back the clock to a time when our population was much smaller. Our major cities will be much more liveable for the next 20 years as a result , improving the quality of life of everyone, not just the Virtual workforce.

Our clients are smart enough

Our clients are smart enough

Starting out, owners or founders of small businesses can survive by relying on their gut instincts and keeping themselves busy. They have complete visibility of what is going on around them from day to day because there just aren’t that many moving parts to grapple with.

As their businesses scale up and grow however, things get far more complex. They might add employees, expand their footprint, or add products or services to the original offering. The initial taste of success can be an intoxicating fuel for their egos and ambition, however the aftertaste is a feeling of ‘flying by the seat of their pants’

Consequently a lot of businesses will stumble while taking the ‘next step’. Despite having a book-keeper, a tax accountant and substantial turnover –  their monthly results and cashflow are volatile, unpredictable and often disappointing.

More than anything they just want to be able go home at night and switch off, having peace of mind that tomorrow will not be the day that they wake up and all their fears about losing everything become a reality.

Our clients are smart or at least smart enough to understand the value in having an experienced, strategic, commercially savvy industry specialist on their team.  They know it’s the most cost-effective way to add this essential capability, to gain an edge in this hyper-competitive environment.

David Dillon is the President of the Virtual CFO Association.

The Virtual CFO Association is an elite peer network, advocating and promoting the emerging Virtual CFO sector within the accounting profession. Collectively the association currently has over 500 years of industry experience, with highly qualified and experienced specialists spread across more than 20 industry verticals. If you would like any more information regarding the Association of Virtual CFO’s, please visit our website www.vcfoassociation.com.au

Surviving and Re-Booting are 2 separate problems

Surviving and Re-Booting are 2 separate problems

As the twin crisis takes it’s grip on SME businesses, desperate owners are turning to their trusted advisors to decipher the vast array of issues they are confronting.

Broadly, there are 2 separate problems : How to survive now that the ‘music has stopped’ and how to start up again when it’s safe to press ‘play’.

For many immediate survival is centred around the raft of Government support and stimuli. Jobkeeper payments, PAYG reduction, payroll tax waivers, land tax relief, bank loan freezes, tenancy evictions moratorium, early release of superannuation.  Essentially this is a compliance exercise. Fill in an application and wait for approval. This will allow most people to ‘hibernate’ until it’s safe to emerge. Bunker down, cut costs to the minimum, reduce inefficiency, eliminate waste and get some income support if you can.

But starting again is going to be a whole different problem. Things aren’t going to just go back to ‘normal’ like a on-off toggle switch.Some businesses in some industries are going to find their feet much quicker than others. Businesses that rely on consumers discretionary spend are going to struggle.

It really highlights the need to be able to properly forecast. This is not a compliance exercise.

Forecasting is a planning tool. It is a creative process using analysis, estimates and assumptions to predict ‘A future’. (Nobody can predict THE future).

Good forecasts allow you the user to drill down into the granular detail to examine the analysis underpinning assumptions and test their ‘reasonableness’.  (things like sales volumes, pricing, wages, materials, capacity, utilisation etc).

Usually the starting point is a detailed revenue forecast that pushes right up into the sales funnel to show, who, what where and when the work is coming from. This is then mapped back against capacity calculations to double check that it’s achievable. Ultimately you need a 3-way forecast, where the Profit & Loss, the Balance Sheet and Cash flow Statement are all integrated, because cash flow is what determines solvency.

Best practice is to run scenarios, of the best, worst and likely case. It forces you to think strategically of the future and gives you the ability to anticipate, evaluate and navigate. This allows you to have contingency plans in place “if this or that happens” to mitigate and seize opportunities, rather than be reactive and hope things work out. (NB hope isn’t a strategy)

A lost of business owners won’t have ever confronted an empty forward order book as they look to re-start. If you’re one of them make sure your trusted advisor has sufficient expertise in forecasting and knowledge of your industry or the likely scenario is that you’ll feel like you’re blindfolded as you fight for survival.

David Dillon is the President of the Virtual CFO Association.

The Virtual CFO Association is an elite peer network, advocating and promoting the emerging Virtual CFO sector within the accounting profession. Collectively the association currently has over 500 years of industry experience, with highly qualified and experienced specialists spread across more than 20 industry verticals. If you would like any more information regarding the Association of Virtual CFO’s, please visit our website www.vcfoassociation.com.au