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Shine a Brighter Light – Bring Your Accounts To Life

Has your business prepared a full re-forecast in these challenging times?  If the answer is NO, then now is the time to do it.  Revenue, Operating costs, Overheads and Cashflow must be reviewed and re-forecast.  No easy task but it’s key for any successful business, especially in these times of extreme change.

Many businesses will be encountering uncertainties at present due to:

  • Activity down
  • Government grants and loans received
  • Cashflow volatility

Business owners are often confused by complicated management accounts and accounting jargon.  They want presentations where the information and content are easily understandable. 

Information presented in the right format is a real game changer in terms of analysing business performance and aiding the decision-making process.

The data table shows Budgeted Monthly Sales versus Actual / Forecast.  Not very exciting is it!

Will this grab the attention of the business owner?  I doubt it!

When this data is translated into a chart it becomes far more effective and powerful. 

We can immediately see the budgeted and actual / forecast sales month by month; the reduction in sales in Q2 due to the impact of COVID-19, then the forecast upturn through Q3. 

Annual sales are forecast to be £1M less than budgeted which should raise a number of follow up questions. 

  • Are there departments within the business that are struggling more than others? 
  • Can the cost base be reduced to offset the decrease in sales? 
  • What impact will the drop in sales have on the Cashflow forecast?
  • Your accountant should be answering these questions and providing this level of insight on a monthly basis. 

Below is a Waterfall chart tracking budgeted vs forecast overheads for 2020. 

It’s far more effective to view the movements graphically.  A list of numbers or data table just don’t carry the same insight or effectiveness.  The waterfall chart is ideal for visualising:

  • The starting value > Budget
  • The positive and negative changes expected > Overhead cost categories
  • The resulting end value > Forecast

Final Thoughts:

Monthly re-forecasting is critical for all businesses.

Charts and graphs are great ways of presenting data and explaining the story.

Make sure your accountant provides this information on a monthly basis.  If they aren’t, as a business owner, you should be asking why not……or finding an accountant that does!