Organized Financial’s

Organized Financial’s are your standard financial reports organized and tuned to the needs of the organization and not necessarily satisfying period accounting reporting to local, state and federal agencies.  It is the same data but organized to align with the operations of the business.  It may be as simple as having several P/L’s for each line of business instead of one consolidated P/L.  Or, providing breakdowns by cost center for each management level so that key managers have ownership of a portion of the financial report.

Why is this important? 
In my experience it was always productive to be able to connect with what happened in the company with how it appeared in the financial report.  This realization by managers and employees allowed them to be aware of what they did and how it affected the monthly financial results.  Just knowing they were operating with a budget resulted in important decisions on how they did their daily jobs which resulted in a more efficient use of materials and time.

Making changes to the financial system can be a challenge for the uniformed.  Involving someone familiar with this approach to managing would be advised as many traditional accounting professionals are somewhat resistant altering or changing what they consider to be their baby. Chart of accounts may need to be changed (expanded) to provide the breakdown, use of cost accounting methods may also be necessary to get the degree of detail your business needs which imposes more detail on the accounting department. However, once done and used properly the accounting group feels satisfied when they see operational types tied into the financial reports, honoring cutoffs to make sure the results are as favorable as possible.

As Leadership, Process, and Metrics, Organized Financial’s has a place in the effective operation of the business.  Where Leadership might be the company “brain” and Process the “backbone” that connects everything and Metrics the “nervous system” to report status, then Organized Financial’s serves as the ultimate information filter and measurement scorecard for the business.  Commitment, discipline, follow through in each of these areas will lead a company toward Above-market Value.

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