It’s the first day after month end.  How did you do last month?

 

Most companies just have a rough idea.  They won’t know until they get their month end financials.  The problem is that could be several days away at best or mid month or in the worst of cases, towards the end of the month.

 

Ask yourself :
Is there a reason why you shouldn’t know the core of your financial activity right at month end? 
Are there really revenues or expenses that you should be uncertain of to a material degree at this point?

 

Generally the answer is no.  Most companies should know their revenues at this point.  Most of the operating expenses should also be able to be estimated to a reasonable degree by the end of the month as well.  Generally one can get their arms around key balance sheet items now too.  What usually holds up the month end is waiting for some odds and ends to come in and getting various numbers more precise.  The precision is needed for the month end financials, but doesn’t prevent having a sense of how results would look based on the information at hand right at month end.

 

That’s where the financial flash comes in. 

       

The financial flash can look very similar to the month end financial statements- balance sheet, income statement and cash flow.  The difference the flash works off estimated numbers where final numbers are not in yet.  The missing pieces, such as the last day or two of expenses for some items, are estimated and added in to the actual numbers for the first 28 or so days of the month.

 

Not many companies do this.  Those that do can get a jump on reviewing their monthly results and taking action, while their competitors are still waiting for final numbers. 

 

How much more could you do if you have 30 days to act on the numbers rather than 15 days if your financials come in at the middle of the month? 

 

I first did this at a pharmaceutical firm where I was CFO.  By 10 AM of the first day of the month, I would have a flash report out to our management team and to our investors.  You can bet that we were the first to report preliminary numbers each month to the private equity firms.