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It used to be that the month-end financial reporting package consisted of an income statement and balance sheet, and maybe a statement of cash flows. These are the three basic statements that every bookkeeper can easily generate at the end of each month. As technology has advanced and entrepreneurs are getting more and more data driven, it is critical for financial leaders to be better at tracking trends, analyzing the changes and trends, and incorporating data from operations into overall viewpoints for the CEO and Management Team.

The month-end package is not just comprised of your financial statements. Just as the role of the accounting department and the role of the CFO continues to evolve, so should the month-end report. The month-end report should be a collection of management reports that capture key data that will be used to make decisions and drive the business. It should include much more than just your financial statements.

What Should Your Month End Reports Contain?

The month-end report should include the financial statements. But they should also include operational data, metrics, and dashboards that are both usable and meaningful. Remember, whatever data is provided should be used to make decisions.

For example, a month-end report for an ecommerce company might include the following:

  • Income Statement
  • Balance Sheet
  • Cash Flow Statement
  • Average Order Value (AOV)
  • Click Through Rates
  • Conversion Rates
  • Number of Repeat Customers
  • Churn Rates
  • Inventory Turns
  • Advertising Spend
  • Number of Followers on Facebook

Depending on the size and complexity of your business, you could have more, or fewer, metrics to track. Other types of business, e.g. manufacturing, business services, SaaS, etc., will have different KPIs that are unique to those industries.

Be careful though… Providing meaningful useful information at month-end does not mean overkill with useless data. Businesses often adopt dashboards and metrics, but sometimes they go to the other extreme and enter into “analysis paralysis”. What should your month end reports contain? Not so much that there is an overload of information that cannot be used effectively or at all.

Efficiency

The month-end report should not be a binder that is 4 inches thick. The ideal financial report at month end should be one that the executive team can review in one hour and get a good feel for where the company is and where it is going. This will vary from company to company. In general, the report should be detailed enough to capture the most important items to make decisions, but condense enough so the management team does not spend a full day reading a large binder. Again, this will vary company to company.

The CFO is responsible for gathering this data working hand in hand with accounting and operations. A good CFO is actually someone that has a very good understanding of the operations of a business. The CFO must fully understand and interpret the operating dashboards and metrics before this information is passed on to the CEO.

Summary

The month-end financial reporting package should capture more than just your financial statements. It should also capture the following:

  • Key operational data Information that is usable to make meaningful decisions
  • Key metrics and dashboards for your business and industry
  • Keep it short and sweet so the executive team can review this report in an hour or less

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