Value of the Monthly Financial Review
The value in reviewing the results of your efforts by analyzing monthly financial statements is in learning how to achieve more with less. It’s about pushing your organization to get more out of tomorrow than you got yesterday by understanding all of the variables that impact the outcomes of your activities, understanding that these variables change, and by tactfully deploying your resources with a simple, crystal clear objective and the unique skill called agility leading the way.
Sustainable revenue growth and quality of earnings are your highest priorities. Your strategy must be solely focused on achieving these two critical outcomes. If yours isn’t, you’ve got a problem.
So where do you start and how do you know you’re running a worthwhile drill?
Your activities are your choice. They are what you deploy your resources to pursue – your employees, your cash. You do this to generate a return on investment. Your strategy should be carefully tailored to accommodate for the competitive environment, for the success of your customer market and for the durability of your brand recognition and value. Achieving product/market fit is one thing, building competitive brand value in the long run happens by focusing on maintaining product/market fit and pushing the competitive boundaries in your industry.
So how do CFOs help lead their organizations to successful financial outcomes? By understanding their organization’s collective objectives, resources and all of the variables that impact their efforts and incorporating all of them into achievable financial projections with tight controls. The problem is there’s only one truth about financial projections: you will never hit them, you will always be off. It’s only a matter of which way and by how much.
There’s only one truth about financial projections: you will never hit them, you will always be off. It’s only a matter of which way and by how much.
So how do you benefit from the process? How do you generate relevant information that is in fact insightful, useful and actionable? You incorporate a comprehensive Financial Planning & Analysis routine into your daily procedures.ALIGNMT Chief Financial Office Support
Financial Planning and Analysis programs provide value-added financial support and analysis by leading the long term forecasting and analytic processes surrounding business operations and new strategic growth initiatives – both organic and strategic. Finance programs are customized to work closely with company management to facilitate effective, data-driven decision making and drive insight into the business with analytics that support the long-term strategic direction of the company. Key activities include leading company-wide strategic and mid-term operational planning and forecasting processes in addition to key initiative modeling activities that provide accurate financial performance measurement.
Financial performance measurement comprises all the techniques that users of financial statements employ to show relationships in your organization’s activities to the ensuing financial results. The stakeholders that care are (i) everyone in your organization and (ii) your investors.
Great detail should be paid to your monthly financial review to ensure you gain the benefits of the process. By incorporating the experience of staffers in the relevant groups within your organization, you will benefit from collaboration, buy-in and validation of the collective goals. By isolating any group’s input or buy-in from the others you will sabotage the entire process, virtually guaranteeing material variance from your budgeted projections on the top line, the bottom line, or both. Run properly, the monthly financial review will deliver many benefits to your organization:
- Validate internal controls
- Ensure that financial information accurately reflects your organization’s activities
- Establish achievable financial expectations
- Identify and analyze exceptions
- Address budget variances
- Address possible inaccuracies through comparisons of actual results to budget guidelines
- Provide quality assurance check prior to distribution of statement to respective department management
- Clear and specific communication – program, budget and administrative
- All parties knowledgeable with regard to plans, status, issues, actions and timeframes
- No surprises!