Going Beyond Monthly P&L's and Balance Sheets
While monthly financials are the most widely used analytics to measure monthly performance, they may not be the best. Your monthly financials describe what has happened over time, but they require additional analysis to estimate their impact on future earnings. Someone once compared the use of monthly P&L’s to run a business as “steering from the wake of the boat.”
Predictive business models use historical data like your financials to identify risks and opportunities. Given that no predictive analytics are 100% accurate, your NextGen CFO can develop financial models using sales forecasts and marketing data to more accurately project revenues and cash needs. This becomes very important when evaluating future capital needs and minimizing risk exposure.
Your company’s financial data can also be used for benchmarking against other companies in your industry or in the broader marketplace. These metrics can be used to help identify critical issues that are proving costly to your business and require immediate attention. “What If” analysis can then be used to determine the impact that reducing inventories or accelerating collections can have on your cash flow. Benchmarking is a very useful tool for improving processes, increasing profits, and maximizing business values.
What data do you have available? How are you currently using it? Just as important, do you have the people and resources available to analyze and make sense of the data that you have?
NextGen CFO is experienced in bringing clarity and value to address these critical business issues. Contact us today for more information about our complimentary needs assessment.
NextGen CFO bridges the gap between the Owner/CEO and accounting staff by performing financial functions that create value.
|Beyond Monthly P&L's and Balance Sheets|