The creation of a budget is the first step for the business owner in managing the costs of the business and having some insight into the expected patterns of business in the period.
A budget in isolation is not a solution for the business owner to manage costs and cashflows of the business.
Good Management Reports and Analysis of trends of the business on a regular basis will allow the business owner to gain a greater understanding of the patterns. Regular management reporting and analysis will also help to highlight any errors, omissions or duplications that have been processed into the financial results.
Unfortunately fraud is not uncommon in business and as businesses grow, the controllers of finance are often overwhelmed with the daily tasks that need completing and the opportunity for fraud opens up.
Having an understanding of the finances in the business combined with a regular review of the actual numbers will allow the business owners to easily identify any fraud or error that may be in the financials – as long as there are appropriate segregation of duties in the reporting process.
These regular management reports will keep the business owner up-to-date with the performance of the business so that timely action can be taken if it is identified that the results are not in line with the projected results according to the budget.
Understanding the key drivers of the business is key in creating the most meaningful management reports to analyse. If these can be appropriately reported on every month, it becomes very apparent when something is not correct in the financial information.
Analysis of the management reports and an understanding of the benchmarks applicable to the business will allow the business owner to identify any areas of opportunity to save costs or to manage the business margins.
Contact us to find out more about our management reporting and analysis packages that we have for small business.