By Simon Kearsley, CEO, bluQube
A recent survey by Pricewaterhouse¬Coopers of more than 100 of the top 200 FTSE companies found that 63% regard the finance function as playing a lead role in the strategic planning process, yet 80% said they were dissatisfied by the quality of the information they receive from finance. Simon Kearsley, CEO at accounting software vendor bluQube explores the key reasons why the calibre of management information (MI) is so crucial.
This is a common complaint from senior management, but if you can extract the right management information here’s how your organisation can benefit:
1. Avoid costly mistakes based on wrong decisions
Questioning the quality of management information is essential if you really want a true picture of what’s happening in your business. The drawback of much that is produced is that it is based on out-of-date information that is often incomplete, incorrect and as a result quite misleading. In some cases no MI can be better than poor MI because you make the wrong decisions based on ill-informed assumptions that can ultimately prove very costly.
2. Relieve squeezes on cashflow
Not being informed about late payers can lead to problems and not knowing when invoices need to go out can lead to delays. Making sure that invoices go out as soon as they are due can be made easier by providing automatic alerts
to senior managers. These can be in the form of an Outlook reminder or even an SMS message. Ask your finance department to provide a simple way for you to check or be warned when certain thresholds are about to be reached.
3. Detect unprofitable goods or services
One of the greatest benefits of good quality MI is that it can reveal areas of the business that may need re-structuring. For example, with specific reporting information you can see what type of work is making you most margin, is it necessary to cancel a contract or do you even need to re-think what types of products and/or services you sell.
4. Adapt to changing market conditions
Every business needs to plan, but they also need the knowledge to alter that plan when external factors alter. For example demand may fall for a particular product or service or new competition has an impact on sales. Being able to spot these trends early will enable you to shift direction before it is too late.
5. Maximise profits
Being better informed means that you can make a positive contribution towards your bottom line. By identifying what’s working and what isn’t enables you to fine-tune your future strategy. As the old adage says, ‘Information is Power’. If you can deliver the appropriate information to the right people in a timely manner, then you can make well-informed decisions that will increase your profitability.
6. Curb spending
Offering your departmental managers an easy means of tracking their budget information on a real-time basis, means that expenditure can be checked and over-spending can be avoided. Using a personalised portal for delivering information automatically means that the finance manager can devolve responsibility to budget holders. Keeping an eye on operational expenditure through regular updates from finance can stop these types of costs spiralling upwards, often a problem for high growth businesses that are so busy with new orders they fail to realise their OPEX is unsustainable.
7. Get managers to take responsibility
You can’t expect managers to act on information that they don’t have or is out of date (e.g. monthly reports that are past their sell by date the day they are issued) but with the introduction of on-line dashboards, managers can quickly and easily see their ‘to do’ list on a single screen. If you haven’t implemented this type of information gathering already you should, because having this type of summary is far more efficient than trawling through reports in an effort to find what’s of interest to you. It is even possible for this type of information to be accessed on the move, a bonus for Blackberry or i-phone users.
If you can identify with all or even some of the above, then it’s time to review the reliability of your management information and how it can be improved. Establishing new processes and controls should be the starting point and in many cases it would be worth evaluating how a new accounting system can help you to automate this. Chances are you’ll be still using the same finance system as when the business started, so it’s hardly surprising that it is struggling to cope with the demands of your existing business AND your planned growth.
If the decision is made to replace the existing system, then the more strategic, forward-thinking finance professionals will look for a scaleable solution that is browser-based and can integrate with other parts of your business so you can capture all the relevant information including some non-financial data, so you can create a true picture of how your business is performing, in a format that is easy to access.
For further information visit www.bluQube.co.uk