Building a solid and reliable data platform

Over the years I have come across numerous agency owners and management teams who don’t fully engage with understanding the finances as they (rightly or wrongly) believe they can’t rely on the information that is being provided. This is typically because of two reasons – the reports are out of date or the data used to produce the reports is wrong.

 

Timeliness
Looking at your financial statements for the prior year, six months after the year-end, is going to provide little value in identifying changes that need to be made in your business now. If you wait that long it’s likely that any issues will have compounded. Even looking at your business on a quarterly basis may not be frequently enough.

 

Accuracy
I have seen numerous reports such as staff utilisation or client profitability that have been
churned out because it was believed to be the right thing to do despite the data being inaccurate. But the reports only have value if the data used to produce them is correct. As
the saying goes, garbage in = garbage out. If your data is input incorrectly or not capturing
the relevant information then any report generated from that data is going to be of little
value, or worse, may lead to the wrong conclusions being drawn.


So what’s the solution?
Fortunately, with advances in technology, financial reporting systems have improved dramatically over the last few years and products such as Xero offer the ability to access
your financial information from anywhere and at anytime.


But they are just a tool and in the same way that you wouldn’t give a formula 1 car to a
learner driver, giving somebody with limited financial knowledge responsibility for updating your accounting system can cause significant problems in the long run.

Using a skilled bookkeeper, particularly one who specialises in working with agencies, will
ensure that not only is the right information being captured in the system, but it is also
extracted in a way that can provide genuine insights to the owners and managers of the
business.


At a minimum, your financial data should be updated and reviewed on a monthly basis.
This will allow you to be in control of what is happening in your agency, identify any
warning signs and take appropriate action to deal with them.