As soon as possible after the month end, beanies working in SME’s all over the world race to produce Management Information for the month. As accurate, consistent, and quickly as possible. The longer it takes, the more ‘stale’ the numbers become. We’ve got to get them published at least a week in advance of the all important Board Meeting to ensure the Board members have enough time to review them in detail … but do they review in detail… really … with so many other competing priorities today!

It’s obvious but the Management Accounts should only contain what the Leadership Team really need to see to allow for informed decision making. It’s such a waste, especially for the Finance Team ordering in pizza for the third night in a row to produce reams of analysis, when so often the bulk of what an SME Board needs can fit on just a few pages with a few nice visuals. The CFO should guide the Board on what they want to see and continually refine the information each month until the key information is distilled.Although every SME is different, here’s my stab at the standard data set I like to see produced by Finance each month:

1: Cover sheet: clearly stating the name of the company and the period in question.
2: Executive Summary: on one page pull together all the key items from the rest of the pack:

*Summary narrative – concise statements on the main Highlights and Lowlights in the month;
*Actual Turnover, Gross Margin, Overhead, and Operating Profit for the last 3 months, broken out by product or service lines with % growth to give an instant view on what is performing well and what is not;
*Aged Debtors – £ and % – a summary of how the ageing looks. A high % of old debt is cause for concern;
*Headcount – A summary of numbers by department for the last 3 months to see at a glance movement in heads;
*Cash at bank – show the bank balance for the last 3 months and include any overdraft facility as headroom;
*Cap expenditure – any material asset purchases in the period;
*KPI’s for the last 3 months – show the breakeven turnover, the burn or cash generation rate, sales per head, overhead per head, and if you’re losing money your ‘cash zero month’ if– this is the cash balance divided by the monthly burn to tell you how many months of cash you have left;For all of the above show the forecast and variance so it’s easy to see if you’re on plan.

3: P&L Actual vs. Forecast: p&l headings down the centre of a landscaped page broken out into the right level of detail to make sure the information is meaningful to the reader. Too little or too much detail will mean important movements or trends will be missed. On the left side of the narrative show actual against forecast for the month completed and compare this if relevant to the same month last year. On the right side of the narrative repeat for the Year to Date cumulative numbers actual against forecast and show the full year forecast which will be the year to date actual plus the forecast for the rest of the year. The forecast should be revised at least quarterly.

4: P&LTrended: this is the same p&l as in 3 above but monthlies put side by side so you can see how the different lines of revenue and cost are trending. This is helpful to spot any obvious errors or concerns. For example rent should not change month to month. One line commentary should be given against material movements in the month, say 10%.

5: Budget: Again the same p&l format broken out by month or by quarter for the full year. Budgets typically go stale soon after they are produced, especially for a dynamic SME but it’s a good reference point on what was decided and may help to refine future budgeting exercises when the Board sees how far off they were in their planning.

6: Balance Sheet: The monthly balance sheet should be presented with the key headings you would expect to see – Fixed Assets broken out by asset class; Current Assets broken out by Stock, Debtors, Cash, Prepayments; Current Liabilities broken out by Creditors, Taxes, Accruals, and other liabilities; Debt; Net Assets; Shareholder Funds;

7: Detailed Aged Debtors Listing: a full listing by customer rank sorted by largest oldest debt first of who owes the business money. Commentary for the oldest debt should be provided; and

8: Cashflow Forecast: a summary of monies in and out for the next 6 months at a minimum by key category – sales, cost of sales, payroll, rent, VAT etc.

The Management Accounts should not be published without sign off from the Finance Director who should be presented with reconciliations for all key accounts. The Board do not need to see this detail but the CFO should be able to quickly access it if the Board want to take a deep dive on any numbers.A well constructed concise set of MI will be keenly awaited by the Board and present a good opportunity for Finance to show the value they can bring to informed decision making at the highest level.

If you’ve got any gorgeous dashboards, please share … redacted of course.