Management Reports and Cash Flow Forecasting
A business needs a blueprint, which acts like a compass that directs the movement of an aircraft that flies in the air. It is said, without a workable compass, the pilot cannot fly the aircraft successfully. In the same way, for a business to succeed, it needs a customised management guide, which needs periodic reviews to ascertain whether or not the business is achieving its set goals and objects as broken down to measurable targets.
The owners of the business and other stakeholders need to know the financial health of the business entity, hence, the essence of business management reports. Albeit there are no universal management reports, each company does set out the form of reports needed by its management for proper planning, control, and monitoring of business activities.
Consequently, we use the ‘Smart Model’ to produce comprehensive management reports, encompassing the trading position at any given time, the statement of assets and liabilities at any given time, aged debtors and aged suppliers, variance analysis of sales and expenses, budget plans, and budgetary control reports coupled with commentaries.
More importantly, we are able, from the company accounting system, to prepare actual and forecast cash flows, which underpins the life wire of the business. This report is very fundamental to the day-to-day operations of a business. As the heart is to a living soul, so is the forecast or actual cash flow to every business entity. It is popularly said, ‘failure to plan is planning is fail’.