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How to Use Financial Information to Receive Better Reports

As clients continue to grow their businesses, having clear visibility and control of financial systems becomes critical. Business leaders must constantly balance cost, performance, capabilities, and business visibility to arrive at an accounting system that meets the needs of all stakeholders. In selecting a system, the business must have clear requirements on the financial information needed to make business decisions, how available and visible the data should be, and what investment in tools and staffing can be made to achieve this.

Defining the Financial Information for Your Business Needs

Every business will have different ways they view, monitor, and interpret financial data. For example, we frequently see job-based views used for construction, general contractors, and homebuilders, while distributors will be oriented more towards customers and cost centers. On the other hand, manufacturers may be interested in views by product line or product family, as they are defined for the individual business. Some businesses, such as manufacturers and distributors, need access to this data daily, while construction companies with fewer, larger jobs can review this weekly or even monthly.

These views are important for monitoring margin expansion or erosion, forecasting contribution margins, or evaluating pricing across departments, products, or jobs. Without this information, business managers lose the agility to respond to the business results and potentially lose opportunities to appropriately manage and invest their capital.

Discovering Your Business’ Visibility

Once the business identifies the financial information needed, the financial system can be fully leveraged to provide this desired visibility. If the cost center expects reporting, then the system must be designed to require cost center data at the point of transaction entry. In our experience, business managers for small- and medium-sized businesses rarely extract the full value of their accounting systems due to a lack of understanding of the capabilities and the importance of the decisions made at setup. By having a plan on the information needed, business managers can better utilize the system to provide the visibility desired.

For example, if you only need the revenue by customer, then you only need one invoice type, and no unique accounts are required. But what if you want revenue by customer and product destination? You may need multiple invoice types to control the ledger accounting.

Or, what if you want to allocate payroll costs to specific jobs? You may need time-tracking software, an allocation spreadsheet for the accountants to record the adjustments, or some other mechanism to capture the data required to provide this visibility.

Assisting During the Onboarding and Interview Process

Calvetti Ferguson can best assist these business needs during our new client onboarding and interview process. We invest the time upfront in our discussions to learn what is most important to them and why to develop a chart of accounts and business processes that help them meet their needs. While accounting systems for small- and medium-sized businesses are generally simple, there are many ways to achieve the same ends. Partnering with advisors with deep experience in financial systems will help you fully use your system and provide the business visibility needed to achieve your business goals.

Contact Us

Calvetti Ferguson works with middle-market companies, private equity firms, and high-net-worth individuals across the country. Regardless of the complexity of the compliance, assurance, advisory, or accounting need, our team is ready to help you. Please complete the form below, and we will follow up with you shortly.