Consero Answers: Why Can’t I Get Good Financial Reporting?

Is your company flying blind?

Timely, reliable financial reports are the eyes and ears of effective decision-making. Without good data, it’s impossible to hammer out a winning business strategy. You can’t be sure that your company is truly creating value, the only ticket to long-term growth and prosperity.

Of course, every organization produces statutory reporting, if only for tax purposes. But that’s not going to answer the questions that really count – especially the big ones around profitability. Which products, services, or projects are the most profitable? Which locations bring in the most revenue? Which customers are your most valuable? And how do these profit variables interact?

These are vital questions, yet at many small and midmarket companies, effective management reporting remains patchy or non-existent. What’s going on here? The following are some financial reporting challenges that may be hobbling your business, and some ways forward:

1. Your people don’t have the time, the skills, or the business perspective to deliver the information you need. Small and mid-market companies have limited budgets for G&A, including finance, and staffers’ hours are typically consumed with paying bills, invoicing clients and meeting statutory reporting requirements. They may have only limited knowledge of the spreadsheets and other finance tools they use for their day-to-day tasks. And, chances are, they lack the high-level view of the business that would enable them to quickly “get it” when an exec needs fast answers to strategic questions.

As a result, the exec ends up delving into the nuts-and-bolts data and compiling the results himself or herself. Not a great use of an valuable resource, and not even a reproducible process for the next time a big-picture question comes up.

What you can do: Consider upgrading the skill sets available to your business. Top performing companies find ways to reduce their transactional processing costs so they can afford higher level financial leadership and allocate time towards more granular reporting and analysis. Free up your top talent from endless multitasking and micromanaging low-value data collection processes.

2. Your finance systems can’t provide multi-dimensional views of your data. Immature systems may lack robust reporting capabilities. QuickBooks, for example, is a great small company accounting package and offers some basic functionality, but once a company grows beyond a single product or location, its limitations quickly become apparent. It can’t easily give you a detailed view of, let’s say, expenses for multiple projects and by location.

At many SMBs, disparate, poorly integrated systems – accounting, time tracking, billing – are the rule, so data has to be manually assembled, manipulated and formatted. Large organizations can compensate for system deficiencies by dedicating skilled financial analysts to reporting tasks, but smaller firms don’t have that luxury – see 1, above.

What you can do: Consider investing in higher-end finance systems that give you more ways to slice and dice your data and develop consistent, reproducible reporting processes. New cloud-based financial management and accounting packages offer powerful functionality without a massive upfront investment, and the vendors are increasingly positioning these products to meet the needs of small and midsize organizations. They’re definitely worth investigating.

3. Your systems are not set up to support high-value reporting. The old IT maxim “garbage in, garbage out” certainly applies here. If you want visibility into revenue by product or project type, you’re going to need a front-end coding process that supports that breakout. Is your chart of accounts set up to capture the information that’s most useful for decision-making? If not, you’ll face a real challenge in trying to recapture it at the back end.

What you can do: Before implementing a new finance or accounting tool, think carefully about the reporting needs of the business. Review your chart of accounts for any discrepancies with your intended end-use. Don’t assume that the way you’ve always done it is the best way.

Whatever combination of people, processes and technology you shoot for, a considered approach to financial reporting will always beat the ad hoc, knee-deep-in-data approach hands down. In the long term, having real financial data on which to base your decisions is the only way to keep your company on the path to value and growth.

Consero FaaS: Disrupting the Outdated Traditional F&A Model

  • Cash to GAAP conversion
  • Clean-up work
  • Interim oversight & support
  • Accounting software Implementation

Build it Yourself Solution

  • CFO / Interim CFO
  • Consultants / VARs

Consero FaaS Solution

  • CFO / Interim CFO
  • or Consero Interim CFO
  • Consero Setup/Transformation
Ongoing F&A
  • Monthly financials
  • Daily accounting support
  • Management reporting
  • Integrate add-on acquisitions

Build it Yourself Solution

  • CFO
  • Controllers & Accounting Team
  • Enterprise Accounting Applications

Consero FaaS Solution

  • CFO
  • or Consero Fractional CFO
  • Consero FaaS Enterprise F&A Software and Services

New PE Platform Investment F&A Challenges

Founder Owned Company Accounting:
  • Existing accounting done on a cash/hybrid basis
  • Run on SMB accounting software and other disparate applications
  • Inability to produce auditable financials
  • Lack of know-how to develop projections & KPIs
  • No consistency/structure to customer contracts
  • Underqualified staff
  • Non-scalable manual processes
Carve-Out Accounting:
  • Required to move off parent company accounting applications in a timely fashion
  • Have to build an entire F&A team
  • No documented operational policies and procedures
To Optimized Finance & Accounting:
  • Monthly financials available in 5-10 business days
  • Audit and diligence ready support details
  • Integrated enterprise grade accounting software
  • Budget and forecast reporting
  • Business KPIs
  • Efficient & scalable processes for rolling in add-ons