After more than 30 years of experience in accounting and auditing, I have heard countless recurring complaints from people who need to make timely financial decisions. Chief among the complaints, I often hear, “To prepare for a meeting of my Board of Directors, I need to gather my entire team. Preparation for such meetings takes on average five to 15 days!”
- Finance needs to prepare budgets, forecasts, financial statements, EBIDTA, cash flow, revenue stream data, and key performance indicators
- Commercial needs to provide data related to sales, products, sectors, and units
- Production should report on cost of goods or services sold
- Audit should be on hand to verify and endorse the financial information
- Legal needs to deliver information on processes or situations that positively or negatively impact the business
- Accountants need to attend all of the meetings to answer the questions and provide explanations related to any figure
- Human resources should be included to understand the future impact on the company’s staffing and the associated costs
- Marketing and design needs to prepare the meeting materials, including a PowerPoint presentation
These are the major players required for any meeting of a Board of Directors. And this is just the preparation required in advance of the meeting.
Typically, on the day of the meeting, once all of this data is presented, competitive debate erupts: Which business unit sold more? What is the gross profit? And, invariably, there is always someone who cross-references the financial statements and the sales presentations, or asks an obscure question about the irregularities in the cost of sales over the last 12 months (assuming you have done this analysis and that you are concerned with the consistency in gross profits). Naturally, a look of confusion slowly creeps over the faces of the Board members. When no one has the courage to defend the argument made, the accountant then typically agrees to review the data more closely and report back at the next meeting.
Some of you may relate to the scenario above. Experience tells us that 95% of companies have problems with determining the cost of their sales. Reality shows that companies have an ocean of structured information (from your financial information system, for example) and unstructured information (Excel sheets and others data sources that must be prepared manually).
As management evolves, the goal is to obtain important information required for decision-making without the need for manual data review and assembly, or for experts to be on hand to decipher this information. The goal of modern management is to collect and store information in structured systems that allow for access and visibility in real-time. Thus, the time to deliver valuable data, such as the reports required for a Board meeting, is minimal and the effort is light.