As a business owner, you might be wondering how early you can reasonably expect your monthly financial reports. Should you get them by the 5th workday? The 10th workday? In the middle of the month? When is the optimal time to review them, and can you get them that early?
The answer is surprisingly simple: you could expect your monthly financial reports on the second of every month.
Requiring Your Reports on the Second Workday Is Completely Reasonable
Think of this as your financial reporting motto: the earlier, the better.
As long as your reports are tied to the key indicators of your business performance (which CFOs worth their salt will ensure), getting your reports on the second workday of the month gives you 18+ additional workdays to make any indicated changes in the current month’s operations.
Your financial reports are a visual representation of everything going on physically in your business. So, as a tool for evaluating performance, they are invaluable, and getting them as early as possible gives you the biggest gift of all: time. Time to react, reinforce, and adjust your processes. And the more time you have to implement positive changes, the sooner the reward of improved performance.
Accounting teams as a rule may cry foul to this “second workday” request. While there may be some financial professionals out there who will hate me for unmasking this, the objections just don’t hold water. Asking for your reports to be delivered on the second of every month is completely reasonable.
To that point: I worked for an international company that had over a billion dollars of revenue per year. We did business in seven different countries, and since this was in the pre-Euro days, we were managing seven different currencies. We owned three manufacturing facilities and eight distribution centers. To say the finances were complex would be an understatement.
But guess what? Our team built a process and was able to close the books, translate everything to US currency, and deliver a final, consolidated report to the CEO by the end of the third workday.
Some Common Issues — And How to Overcome Them
Every business is different, but if your financial professional says they can’t deliver the reports by the second of the month, they’ll likely come to you with one of two reasons:
Reason #1: I don’t get my bank (or credit card) account statements until the 15th.
The first challenge you could your team may address is that bank and credit card statements may not be released until later than the second workday.
Now, technically speaking, that might be true — hard-copy statements for your accounts might not be available until mid-month. But that is not a show-stopper.
With virtually every accounting software for small businesses, from Quickbooks to SAP there is the option to directly integrate bank accounts in real time. That means all of your account information through the end of the month is available … wait for it … whenever you want it, including at the end of the month! So there’s no interference there that prevents a 2nd workday financial reporting deadline.
In this day and age, there is no reason for your team to wait for physical statements to reconcile your books. Your accounts can be updated as often as daily if necessary.
If your finance person tells you they’re waiting on statements to create your reports, make sure they know they can get the data they need in real time: no statement necessary.
Reason #2: I don’t get the vendor bills until the middle of the month.
The other challenge that your bookkeeper or accounting professional will face is not having the bills from all of your vendors as early as they need them.
Now, that might be true, but here’s what I’ve found: first of all, most of your bills will stay the same from month to month, and your finance person should be processing them as they come in throughout the month. Missing bills at the end of the month generally make up no more than 5% of the total expenses.
And – there are ways to deal with that missing 5%. It can be a quick phone call to the vendor to ask what’s owed or a search through the vendor’s online client portal to track down the total. But even if they can’t track down the information, the worst-case scenario is that your team can estimate it, and adjust as necessary the following month.
You have much more to gain from getting insight into your financial performance than you do in waiting for a 5% accuracy factor.
Your financial reports give you clear insight into what tactics need to be adjusted as quickly as possible to keep you on track towards your strategic mission. If you aren’t seeing those reports until the middle of the following month – change that! As quickly as possible.