Not all numbers are created equal in the financial statement.  Some numbers are more solid than others.

Some are based on hard data while others are based on estimates.  Some numbers are readily available while other numbers may take time to generate.  Some numbers are backed up by pretty solid internal reporting while other numbers may have less support from the internal reports.

 

If you want to improve the quality as well as the timeliness of your financial reporting, find the soft spot in your numbers.

 

When I became CFO of a pharmaceutical firm many years ago, there was one particularly glaring soft spot.  Their cost accounting system which drove the margin information and inventory information in the financial statements was not as reliable as other information.  It took a long time to come together and numbers fluctuated dramatically from month to month.  It took a lot of time when I first came on board to run the supporting inventory reports and even those were questionable in value. 

 

I made it a high priority to put in a stronger cost accounting system in place.  Eventually we had a very solid system and one that we could rely on day by day to show what margins were from the previous day. At the end of the month, we were now ready and had margin information at hand.

 

What had been the soft spot of our financial reporting was now our cornerstone.  This allowed us to report preliminary numbers the first morning after month end.  The artificial month to month fluctuations were gone and the final numbers turned out pretty close to the preliminary figures each month.  We were the first company in the portfolio of our private equity investors to report numbers each month.  We could now spend more time on building the business based on what the numbers told us, rather than spending most of our time creating the numbers.

 

Many companies will have a soft spot in their numbers.  Take a look at what is the softest area in your firm   If it is a material area, such as what I faced at the pharmaceutical firm, see what can be done to tighten that area up.