Now that you have assembled all the parts of the Flash Report, it is time to review your results.
The purpose of the Flash Report is to provide management with a timely, “mostly accurate” tool to assess the current state of affairs. Thus, any changes that need to be made can be made quickly.
Emergencies can be proactively addressed at the problem stage, rather than reactively in the crisis stage. If you want complete accuracy, wait until the financial statements for the period are complete 2-4 weeks after the month has ended. In the meanwhile, 80-90% accurate is fine for managing a business.
Have the Owner(s)/Management of the client firm review the results of the Flash Report after it has been completed. If possible, review on a weekly basis in order to expedite the decision making process. This way, the client can react to trends faster.
Include any person or parties involved in the active management of the firm in the performance review of the firm. It is especially important that representatives from Operations, Finance, and Accounting be there as well.
In and of themselves, the numbers do not tell you a whole lot. They serve as a point of reference for discussion.
We recommend that you start off with the review of the firm’s cash position.
The cash position may provide questions as to why cash is short, which in turn will generate questions regarding A/R or sales.
This section will provide management an idea of whether or not they can pay the bills. Deficiencies will usually spring from a collections issue, sales issue or cost/expense issue. It will be up to management to explore each of these areas to see where potential problems lie.
Ultimately, if done right, this section gets to the heart of the business process. It is important that the Finance/Accounting people are in accord with Operations people that these metrics are meaningful. If they are not, keep working at them until they are. This may be several iterations later.
Review of this area can tell management in a very simple way, how the business process is doing.
These metrics should provide a simple read as to the how the heart of the business is beating. Should there be problems, these metrics should capture them in some way. In turn, revenue should be affected as well. For instance, revenue may be down, because a certain machine was down for repairs. Thus, % utilization could tell you indirectly why revenue was down for the period.
Because the firm’s productivity affects its profitability, so too will the results from the Productivity Section be seen in the Profitability Section. It is important for management to confirm this.
Continue to monitor results from period to period. If you need to make changes to Productivity Metrics, please feel free to do so. The key to successful implementation and use of the Flash Report is the commitment to its use and the commitment to communication and discussion.
Some companies may choose to graph the results in addition to having the report in a tabular format. A graph may at times be easier to understand than numbers, especially for analyzing trends.
For the purposes of the report, it may be useful to include 3 historical periods in addition to the current period. This will aid in the analysis of trends.
[gravityform id=”35″ title=”true” description=”true”]