🔒How to speed up management decisions, knowledge

During the American Revolution it could take 30 days to get a message from Congress to Ben Franklin in Europe to bring him up to date on the war effort.

This is the same amount of time many companies need to provide financial information to their management team each month. In today’s world where we can send a message around the globe in the blink of an eye, why are some managers making decisions on information provided at the speed of the American Revolution?

Leaders should insist on real-time information along with current financial statements within one week of a month’s end. This may be accomplished using three steps.

Key indicator report

Develop a daily report for your business that provides management with “flash” information. Flash information is understood to be subject to change, but still may be relied upon for quick knowledge of the status of the business.

Items that would typically be included in a daily flash would include:

• Orders

• Sales/shipments

• Backlog

• Accounts receivable and accounts payable totals and totals over 90 days

• Cash on hand and available under lines of credit

Many businesses include other information that may be important and meaningful to them. This could include head count and open positions for fast-growing companies, or overtime and production metrics.

Tailor it to your business so that you have your finger on the pulse.

Weekly operating reports

You can’t expect what you don’t inspect. Rather than waiting to the end of the next month to see if you made your numbers, develop reports that track in real time activities you believe will allow your people to achieve their goals.

Operating reports are different than financial reports. They include information that is typically measured in units, products, opportunities, calls, etc. Managers find that the preparation of these reports helps them to understand what is going on in their department and focus on the critical path.

If you are trying to ship 10,000 units this month, it’s helpful to know if you have shipped 5,000 by the end of week two.

Similarly, if you are trying to increase sales and you know that knocking on new doors is the key to your team’s success, then keep track of how many doors each person is knocking on every day. Understand what it takes to make a sale or shipment in your business and track that activity.

Typical operating reports come from the sales and production departments. Other departments like engineering and even accounting may have operating reports to allow management to keep on top of critical processes.

Speedy monthly financial reporting

Financial statements should be complete no later than five days after a month’s end. Many companies are getting this important task done in two-to-three business days. The key element to decreasing financial preparation time is to maintain on a daily basis time-consuming tasks like cash reconciliations and credit-card allocations.

Reconciling cash is simple if done every day and takes about five to 10 minutes. Waiting until the bank statement arrives after a month’s end and doing the complete monthly reconciliation can create a burdensome task that takes all day. Plus, if you do it daily, you know your cash position every day.

The same goes for accounting tasks like allocating the credit card bill. Companies are using credit cards on a regular basis to ease purchasing and payments to vendors. However, waiting to get the monthly statement to track down receipts is a big time drain. Do it daily by getting online access to the statement.

Ben Franklin, as postmaster general, was credited with significantly improving the flow of critical information across the Atlantic. Let’s see if you can improve upon his accomplishment in your own business.

Roy Filkoff is a CPA and partner with Altman and Company LLC, a turnaround, restructuring and crisis-management services business.