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Leveraging Financial Reporting — A Hidden Asset

As CFO services consultants to midsize businesses, one of our delights is showing clients how leveraging financial reporting can reveal insights that increase profitability and cash flow.  The insights, which are really hidden assets, that I am referring to are composed historical accounting information that all businesses accumulate, at some level of detail.  Because of our many years working with Fortune 500 companies, we are familiar with the ways that historical accounting and operational data can be used to increase profitability, reduce working capital and better manage resources.  By utilizing the same tools and techniques that are scaled for midsize businesses, our clients have been able to affordably leverage their previously hidden assets to improve business performance and increase enterprise value.  Here are two examples:

By leveraging financial reporting, including traditional financial reports combined with transactional data analysis, businesses are more profitable. Click to Tweet

Industry: Distribution, Revenue Size: $65M

Problem: Needs better demand forecasting tool that provides sales force with insight into customer buying patterns to both better manage inventory and improve customer service levels.

Solution: Using the client’s accounting system, we created a process to download the past 12 months of invoice history by sales rep, by customer, by product, by date with quantity shipped.  We then created an Excel macro to process through all shipments and calculate the average daily burn rate by customer by product.  The Excel macro then used this information to predict the probability of the most recent shipment being fully consumed. 

Result: This enabled the sales reps to more efficiently utilize their time by reviewing the customers that had the highest probability of burning through the most recent shipment.  This was also an excellent tool for new sales reps or sales reps picking up existing accounts to quickly see the customer buying patterns.  This system was set up to automatically email the weekly projections to the sales reps and their manager.  Eventually the information was included in the demand planning process for inventory procurement forecasting.

Industry: Commercial Printing, Revenue Size: $50M

Problem: Need more visibility into profit drivers by job.

Solution: This client already had a robust ERP system, but there was only minimal customized reporting available using the vendor supplied reports.  In this case, we set up routines to download a few selected tables pertaining to shipments, sales reps, customer master, and job tables into an Access database.  Then using Excel PowerPivot, we linked the various tables together and created data dimensions (customer, customer type, sales rep, sales rep type, product, product line, etc.) and measures (sales, average sales price, cost of goods, gross profit and gross margin percent).  

Result: Using the dimensions and measures, we created a series of PowerPivot reports with Slicers that allowed the General Manager to compare the profitability of jobs by customer, by sales rep, by product line, by division over time to identify significant profit improvement tactics/goals.  These tactics/goals were then assigned to the various sales reps and brokers which increased profit 25% over 6 months.

These are just two examples illustrating how leveraging financial reporting and transactional data can help businesses gain new insight into financial performance and take action to improve profitability and cash flow.  Contact us today using the link below when you are ready to take your business to the next level.

Picture of author -- Chase Morrison
About the Author
Chase Morrison provides CFO services, utilizing Profitwyse’s 3D Growth Platform™, enabling his business owner clients to more readily achieve their goals for wealth creation and family legacy.  Contact him today to learn how your business can hit the accelerator using Profitwyse’s proven platform.