By Tim Garrison – When was the last time you had a surprise with a cash balance, cash availability receivables, inventory, a job and the list just keeps going. Did you go into fire fighting mode to put the fire out only to get swamped with the next problem?
When we interview our new clients we ask what processes they have in place for reporting and the frequency of this reporting. It is not a surprise any more to hear that this isn’t in place, or is in place but not followed, isn’t meaningful or I’m to busy to deal with it!
Every business has this issue and the opportunity to make this something that weekly can give management a barometer of where they are on what if vital for that businesses success. There are items that likely would look the same generally for a lot of companies coupled with specific reports that are necessary for the unique aspects of each company.
Your goal as you think through this is what information would help you to know where you were at in a glance in summary form along with what information do you need in detail. I have provided some ideas below that is general but hopefully will help get you started I would suggest weekly would be the appropriate frequency for these.
Summary
- Net liquidity
- Credit line availability
- Backlog of open orders
Net Liquidity
| 6/5/09 | 6/12/09 | 6/13/09 | |
| Checking | 15000 | 35000 | 45000 |
| Receivables | 65000 | 40000 | 50000 |
| Inventory | 10000 | 12000 | 15000 |
| Less Payables | -45000 | -35000 | -40000 |
| Less Credit Line | -15000 | -15000 | -15000 |
| Less Other Current Liabilities | -25000 | -20000 | -20000 |
| Net Liquidity | 5000 | 17000 | 35000 |
Detailed Reports
- Accounts receivable aging
- Accounts payable aging
- Inventory
- Job costing
Now the question comes down to who in your company has the ability to pull this together and who should be getting it. For the detailed reports if you have an accounting staff calls should already be noted on the receivable aging on what is to be happening on past due balances. Inventory over/under stock coupled with back order problems need to be worked through. In job costing how are you tracking compared to budget, best use of staff.
Tim Garrison
The Controllership Group
(317) 572-1225
timg@thecontrollershipgroup.com
