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Meaningful Financial Reporting Starts With A Strategy

Good bookkeeping and accounting provides information that is relevant to your business and decision making. If you want your numbers to be meaningful, they need to be linked to a strategy so you know what it is you’re trying to achieve. The information and reporting

Good bookkeeping and accounting provides information that is relevant to your business and decision making. If you want your numbers to be meaningful, they need to be linked to a strategy so you know what it is you’re trying to achieve.

The information and reporting available from the average accounting package is vast, but generic. Users can quickly lose the value of reviewing financial and management reports, unless they have a clear understanding of:

  • what needs to get done, and by whom, to get where the business needs to be
  • the purpose for doing it
  • how progress towards goals is going to be measured.

For most businesses, that is all a strategy needs to say. A well articulated strategy has benefits and implications well beyond financial reporting. It serves as a guide to staff and management, and forms the foundation piece for developing an effective business culture. It is however surprising how rare it is to find businesses that can hand over a document and say “there’s our strategy / business plan”.

Getting a strategy together need not be complicated, especially if it’s for internal purposes only. You’ll need:

  • a model or framework for the strategy, there are some good ones around, choose the simplest that will work for you (we’ll write some more on these soon, but call us if you want some ideas in the meantime)
  • a whiteboard
  • time to get the management team together for a couple of working sessions.

As is often the case, half the value in developing the strategy is the talking, learning and debate that goes into developing it. Keep it short, sharp and meaningful, ours is two pages long. Once it’s done, remember to revisit it regularly, and refresh the short term targets that flow from it. Keep it relevant and up to date, and use it as the foundation for your planning sessions, and business and staff performance management.

Finally, make sure the data and numbers you gather and report on, through your bookkeeping and accounting systems, relate directly to the goals and measures set out in your strategy. By definition, if they don’t relate to the strategy, they’re meaningless to your business.

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