Financial Reporting
A thirteen-week cash flow forecast, and why profit is not the number to watch
Profitable businesses run out of money regularly. The forecast that prevents it fits on one sheet and takes an hour…
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Financial Reporting
Management reporting that a founder can act on, and statutory reporting that a regulator will accept.
Two audiences, two reports
Statutory reporting looks backwards and is bound by format. Management reporting looks forward and should be bound by nothing except usefulness: revenue by segment, gross margin, cash runway, receivables ageing, and the three or four operating numbers that actually move the business.
A monthly pack that gets read #
Two pages. Page one: cash at bank, cash collected, cash committed, runway in months. Page two: revenue and margin against plan with the variance explained in a sentence each. Anything longer is filed and forgotten.
Consistency beats precision #
A number computed the same way every month, even imperfectly, shows a trend. A definition that changes quarterly shows nothing. Write the definitions down once and keep them.
What you will need
- Monthly trial balance
- Revenue split by product, segment or client
- Receivables and payables ageing
- Cash and loan balances
- Budget or plan for the period
- Headcount and payroll cost
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Financial Reporting
A thirteen-week cash flow forecast, and why profit is not the number to watch
Profitable businesses run out of money regularly. The forecast that prevents it fits on one sheet and takes an hour…