Building Good Financial Processes
How to fine tune your financial processes
There's a hierarchy to a well-oiled financial system:
- Start with the foundation -- good accounting, clean books, and smooth handling of the regular transactions (bills, invoices, payroll, etc.).
- From there move up to reporting -- financial reports, management reports, KPIs, and other advanced tools (like break-even, TTM analysis, etc.).
- The next leg up is the monthly review and forecast -- take the information you've gathered in steps 1 & 2 and set aside time to interpret it each month (review); then make a prediction as to what comes next (forecast)​
- Now we're analyzing and looking for insights -- this is a good place to get some outside help for a fresh set of eyes... in this phase, we're looking to steer the ship and make better business decisions with the numbers at hand​
- Big picture thinking -- only until we have all other layers of the pyramid functioning should we evaluate larger strategic moves; things like acquisitions, new geographies, new product lines, business model pivots, etc.
Here's what that hierarchy looks like visually:
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What's the takeaway?
If you don't have good bookkeeping -- start there; find an excellent partner. If you have good books and regular reports -- consider a fractional CFO or advisor. The ROI on those 2 items will shock you.
3 ways we can help:
- Weekly newsletter - We write a weekly profit improvement newsletter share notes from our own playbook.
- Online course - Profit Mastery University is proven to increase profit and cash flow in just 8 weeks.
- Services - Looking for personalized support? We can help implement the Profit Mastery tools in your business too.
