Today I’m going to start a new series on best practices for designing a Financial Reporting System. This is based on methodology I learned as a Manager of Accounting Systems at Ernst & Young, as well as designing accounting systems for hundreds of small businesses using QuickBooks as part of GrowthForce’s outsourced, online bookkeeping and controller service.
How do you develop a powerful financial reporting system? — by employing Stephen Covey’s 2nd Habit of Highly Effective People: BEGIN WITH THE END IN MIND.
You can do this by answering these questions:
- What reports do you want to see?
- How often do you want to see them?
- Who needs to see them?
- What decisions are they going to make from those reports.
The biggest mistake small business ceo’s make is creating way too many reports just because they can. Less is more. If you want a well-run organization, focus on just the information you need to make decisions. It cost money to produce each report. Not just to compile, produce and distribute the reports – but the cost to capture the information and reconcile it once its captured. There’s a cost to every additional field you require to be entered in the database. There’s another cost to reconcile each field that humans have entered. But the biggest cost is the lack of focus. If you have too many reports, they become meaningless and critical decisions get lost.
The next post in the reporting series will focus on how to decide which reports you should create.
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