How to Create and Use Dashboards to Highlight Areas for Action!
Many businesses struggle with basic administration daily as they perform accounting to record activities, administer payroll, manage cash flow with paying bills and collecting invoices, attempting to reconcile activities to be sure nothing is missing or out of place. At the end of the month, producing financial statements becomes the task needed. Once complete, 15 or so days later, it is back to square one doing this all over again.
This Cycle is: DATA to INFORMATION.
Successful management requires the conversion of INFORMATION to INSIGHTS in order to understand what is going well and poorly, so that the final piece can be put into place: ACTION TOWARD IMPROVEMENT. Without actions, no change will occur, and the Company is left on autopilot.
A Healthy Cycle then is: DATA to INFORMATION to INSIGHT to ACTION.
How do we create insights that may be measured, and report them automatically to management for review and action when needed?
- Variance from a standard demonstrates activities that are changing. Sometimes they change for the good, and sometimes they change for the worse. We need to know either way to understand cause and effect.
- Standards to consider using would include:
- Trends over Time: Annual to annual; Monthly to monthly, year to date to year to date, or rolling 12 months compared to same rolling 12 months from a previous year (to eliminate seasonality).
- Plan or Budget for the period: When you charted your desired course for the year, you decided how you wanted the business to perform. Is it? And if not, why not?
- Industry Competitors: Who is your competition and how are they performing? If you can get access to industry financial data, you can use this as a comparison to help you understand how they operate as well.
- Key Performance Indicators should be used and developed that are behavior and result drivers for your particular business, and may not be financial in nature.
- Automatic Financial Analysis should accompany these reports. This action reports financial and performance relationships that give you insight on Profitability, Liquidity, and Solvency. They can also be enhanced to report compliance with Bank Loan covenant requirements.
How do I get this all done with my limited staff, or the time pressures I am already experiencing?
- Partner with your Accounting Firm, who may have this capacity in their office software offerings. HLB Gross Collins offers an Analytical and Trend Review, with built in Financial Analytics service complimentary to clients as a result of using the Firm’s annual compliance services. Clients can receive an annual report, or upload their monthly general ledger files to our Portal and review the results online automatically.
- Utilize Dashboard Capabilities of Major Software Vendors.- Some Accounting and EPR vendors are beginning to include these features in newer versions of their product offerings.
- Develop Excel reporting to convert Reporting Results into Insight reports. This is more upfront time consuming, but it can be more valuable than not accomplishing the ability to gain insight where needed.
As always, we are committed to assisting business in achieving their goal of success in as efficient and effective means possible.
Consider accessing one of our Client Engagement managers to help you understand how to run your business from insights!
Call 770-433-1711 or email [email protected] for help in your circumstance.