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The importance of the 3Rs
As businesses start to plan their way out of lockdown and into the 'next normal', there’s one characteristic of their business which will have a significant impact on that transition, that is the ability to get Reliable, Relevant and Real-time business information. The new 3Rs!
As business advisors we at French Duncan have for some time been emphasising the need for real-time data in making good business decisions. Establishing relevant Key Performance Indicators ('KPIs') and monitoring performance against these parameters on a regular basis is critical to driving change in a business.
For many businesses it has been viewed as a 'nice to have' not a critical element in the decision making process. However that’s fine if you have a good idea of what lies ahead. We don’t have that luxury right now!
The development of cloud based accounting systems have allowed businesses to have real time data available in a very flexible format which lends itself to providing the necessary data to assist in the decision making process which will be critical to businesses over the medium to long term period ahead. For example:
Unfortunately many businesses look at the accounting records as an annual exercise in order to calculate what tax is due, or a quarterly process in calculating VAT and in many ways this makes them irrelevant to the day to day management of the business.
This approach is workable if everything else stays the same. That’s obviously not the case now or going to be in the foreseeable future!
So how can we help?
We believe there are three stages to moving forward which right now every business should be driving towards:
Cloud-based bookkeeping systems such as Xero provide a platform for businesses to implement real-time reporting. By connecting your bookkeeping software direct to your bank account, manual entries are eliminated and the real-time, daily processing becomes automated. Similarly, integrating Xero to invoice recognition software, CRM systems and workflow management tools connects all aspects of your business to your financial information. Doing all this drives efficiency by reducing manual intervention and eliminating duplication of work in a paperless system.
By connecting these business tools the process can become so much more than bookkeeping, provided the output delivers value beyond a VAT return or a set of financial statements. This is where our FD Reporting technology comes in; it achieves this by extracting the financial information and presenting this to business owners in a visual, bespoke, KPI-focussed report pack. When presented by our Entrepreneurial Services team along with their insights and practical, commercial business advice, this adds another level of value.
FD Reporting sample reports:
The move towards meetings held over video call adds another exciting dimension to FD Reporting where we delve into the system on screen with the business owner, presenting scenarios, comparing different periods, trends, targets and KPIs at the click of a button. At a point where every businesses is dealing with multiple scenarios around income and expenditure, it is really helpful to be able to model these in a live environment and immediately see what it means for business health.
Within our Entrepreneurial Services team we have a wealth of experience in all aspects of implementing this change. We can do so alongside your internal finance team, or as a wholly outsourced end-to-end service that encompasses the initial setup, ongoing bookkeeping and management accounts via FD Reporting.
At a time where so much is being re-evaluated, we believe this is the future of financial information and management accounting – where the outputs really do help people manage their business. And don’t just take our word for it, here’s what our client Paul Sokhi, Managing Director of Morrison Community Care Group said about the service we deliver:
"The report is night and day to what we have been getting previously, and exactly what we want to help us run our business efficiently.
"We are getting real benefit from these reports; they let us see how we're performing against our KPIs and help us identify any issues and make decisions based on that insight, allowing us to operate each of our services cost effectively, allowing us to develop our business, invest in our employees and continuously improve our services to meet the changing needs of the local community and remain fit for purpose.”
(Read the full case study of how we implemented FD Reporting and benefits it brought Morrison Community Care by clicking here.)
So just as it was important to learn the 3Rs at school as the foundation for learning, so by focusing on Reliable, Relevant and Real-time business information we believe that business owners can establish a new foundation, which allied to FD Reporting, can provide the intelligent interpretation of the data to help them make good long term business decisions in these uncertain times.
Click here to see Neil's profile and contact details.
Or email him directly at: N.Robb@frenchduncan.co.uk
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