The annual accounts arrive several months after the end of the financial year: they describe the past, but they do not let you steer the business day to day. To make the right decisions at the right time, business leaders need regular, reliable and readable information. That is the role of dashboards and interim accounts.
Why use a dashboard?
- see what is coming: spot a fall in margin or a cash flow squeeze before it becomes a problem;
- decide: hire, invest or adjust prices on the basis of hard figures;
- communicate: present clear figures to your shareholders, your bank or your teams;
- measure the effect of your actions over time.
Reliable figures above all
A dashboard is only as valuable as the data that feeds it. This requires up-to-date accounts, regular bank reconciliations and consistent treatment of transactions from one month to the next. An impressive indicator built on incomplete data leads to poor decisions.
Which indicators should you track?
There is no one-size-fits-all dashboard: the indicators depend on your business. However, they often include:
Activity
- revenue, compared with the same period of the previous year and with the budget;
- the order book or the volume of signed quotes.
Profitability
- gross margin and margin rate;
- the main overheads and how they are changing;
- interim profit.
Cash flow
- the cash balance and its forecast for the coming months;
- trade receivables and late payments;
- trade payables and upcoming due dates.
How often?
Monthly monitoring suits most SMEs; some highly seasonal businesses or those with tight cash flow benefit from tracking a few key indicators every week. Conversely, a more complete set of interim accounts, quarterly or half-yearly, allows an in-depth review and helps you prepare for the year-end.
Mistakes to avoid
- too many indicators: ten well-chosen ones are better than an unreadable table;
- figures without a benchmark: an indicator is read against a target or a past period;
- a tool that is never updated: regularity matters more than sophistication;
- no analysis: a figure that moves must be explained.
The role of your chartered accountant
Your chartered accountant produces interim accounts and reports, ensures the data is reliable and helps you interpret it. They can also support you in drawing up a budget or a business plan, and in setting up management tools suited to your organisation.
Where to start?
There is no need to aim for a complete tool from the outset. A step-by-step approach works better:
- choose five to ten indicators that are genuinely useful for your decisions;
- define a data source and an update frequency for each one;
- set a regular meeting to discuss them, on your own or with your adviser;
- expand the tool over time, based on the questions that keep coming up.
A well-built spreadsheet is often enough to begin with; a more advanced tool can follow once your needs are clearly identified.
In summary
A good dashboard is simple, regular and fed by reliable accounts. It is one of the most effective ways of turning figures into decisions. LAYODIS produces the interim accounts and reports you need to steer your business through its accounting services, and supports the development of your management tools through management consulting. Let’s talk about your needs.
