Most businesses make key business decisions based on their monthly reports, but when these decisions are based on inaccurate financial reporting, things can go horribly wrong.
In addition to providing the input when deciding the priorities for the upcoming month, monthly financial reports are also the basis of gauging the health of the business. Therefore, basing strategic and tactical decisions upon inaccurate financial reporting can be detrimental to the cash flow and profitability of the business.
Warning signs of inaccurate financial reporting
The key to uncovering inaccurate financial reporting is to look at the process of how and by whom these reports are generated.
Selecting the right person is ‘dead’ easy.
Without a doubt, the person who a business entrusts with managing and reporting financial data must be trustworthy and qualified. What is most important, however, is the efficiency and reliability of the process through which reporting is generated. As a rule of thumb, the more manual the process, the more chance there is of error creeping in – and higher the risk of inaccurate reporting.
If your process involves any of the following:
- Transferring data between different systems;
- Manually inputting data into a spreadsheet;
- Entering data into an offline platform;
- High turnover time from inputting data to generating reports; or
- Not using the right software…
…then, alarm bells should be sounding!
Watch out for those warning signs!
The consequences of inaccurate financial reporting
I’ve watched many businesses endure the harsh consequences due to the inaccuracy of their financial reporting. Unfortunately for these businesses, this resulted in:
- Uninformed decisions;
- Dead stock;
- Damaged company credibility;
- Missing red flags;
- Low cash flow;
- If profit is reported too low – the business could be seen as undervalued; or
- If profit is reported too high – the business can cause a higher tax liability.
Learn from the mistakes of others
Erase mistakes before they arise.
I’m a firm believer in learning from your mistakes, but an even greater advocate of avoiding those mistakes by learning from others who have already gone down that path – hence this blog.
To avoid the risk of inaccurate financial reporting or incomplete reporting, you should be enhancing your reporting process with the following capabilities:
- Integration between core systems – removing the need for manual exports and imports.
- Automated financial tracking – removing the need to manual input data and decipher outputs.
- Online accessibility – allowing multi-location accessibility and providing a source of backup.
- Modules specific to your business’ requirements – your financial and business management software should be able to configure to the needs of your specific business and industry standards.
- Software provider with experience in your industry – your software provider should have experience in your industry, so as to best assist you in meeting industry regulations and requirements.
- Access to qualified accountants as needed – you should have access to qualified accountants that can assist you with any issues you may be facing regarding your financial data.
How does Micronet Systems improve the accuracy of your financial reports?
Micronet is a business management system that can be specifically configured to suit a combination of distribution, service, job costing and / or manufacturing companies. The system improves the accuracy of your financial reports by leveraging the following:
- End-to-end solutions for business – Integration is a core value to Micronet, with solutions for integrated financials, warehouse management, e-business, customer relationship management, retail / POS, sales force management, business intelligence, and service management.
- Micronet’s accounting solutions provide an accurate financial picture of your business with Micronet’s General Ledger, allowing allocations for recurring and scheduled (automated) general ledger entries and automated notifications.
- By providing online accessibility, Micronet’s Creditor and Debtor Ledger assists your business with efficient and accurate cash management, tracking of creditor payments, total visibility of your liabilities to creditors, customer information, and online customer pricing and debtor control.
- Micronet has a range of business management solutions, with software that can be specifically configured to suit a combination of distribution, service, job costing and / or manufacturing companies.
- Our software has been implemented in over 2,000 retail / distribution / wholesale / supplier companies in the following industries:
- Automotiv
- Chemical
- Cleaning Equipment
- Electronic
- Engineering
- Food & Beverage
- Furniture
- Homeware
- Hydraulic Hose
- Industrial Bearing
- Laboratory
- Lighting
- Mining
- Plumbing / Air Conditioning Services
- Rubber / Plastic / Steel
- Safety Equipment
- Stationery & Photocopy
- Tile
- Timber Yards
- We have a team of qualified accountants ready to assist with a range of enquiries.
Have you ever had to base a key business decision on inaccurate or incomplete financial reporting? Or are you concerned about the accuracy of your financial reports?
Our experienced consultants can assist with this tricky situation. You can reach me on 02 9542 2000. I’m always happy to help.
Stuart Duncan is a Senior Sales Consultant at Micronet Systems and is focused on helping business leaders overcome inefficient processes regarding sales, inventory and accounting systems by leveraging cutting edge technology. If you want to gain better control of your key processes, then leverage Stuart’s 35 years of experience to help you drive real change in your business.