If you are leading in a growing agency, it’s important to have financial discipline in order to assure that you have smooth operations. In particular, having good reporting in place to measure profitability and cash flow is crucial to planning for your future. The adage in business is true: “If you don’t measure it, you can’t manage it.” Financial discipline starts with good planning, measurement, and prudent decision making.
Your book keeper can help you have regular reviews of your Profit and Loss report as well as your Cash Flow Report and Balance Sheet. If you ARE your book keeper, set aside time in your schedule to assure that you are keeping track of your income and expenses. Below are some tips for how to use these important reporting tools.
To develop financial discipline, follow a continuous improvement process
- Plan for what your financial expectations are
- Implement your plan with your team
- Measure your results on regular financial statements
- Learn from what your results are vs. plan and vs. last period
- Adjust your actions and processes to improve
You’ll find that as you develop a practice of financial discipline, your understanding of the key opportunities in your business will improve. Your team will have a greater sense of control and you will learn to grow profitably.
12 Questions to Ask to Strengthen Financial Discipline
In order to gain the most from reviewing your business reports, here are some questions to ask as you review your financial statements and improve your business performance.
- What are trends by payer?
- Are all billable hours being reported?
- Are rates per billing unit fair and sustainable?
- Is it time to try to renegotiate with payers?
- Is time reporting accurate?
- Are marketing expenses driving inquiries and/or staff recruiting?
- Is discretionary spending appropriate?
- Is staffing adequate and as efficient as possible?
- Are statement reconciliations being done regularly?
- Are spending policies clear, effective and followed consistently and comprehensively?
- Are accounts receivable being followed up regularly and diligently?
- Are there controls to assure appropriate accounts payable management?
These are some of the basic approaches that you may find helpful in improving your financial discipline.
If you’d like more information on how to implement financial reports and interpret them, watch Laura McKee’s recent webinar, Financial Discipline: Key Opportunities in Leading an ABA Organization. Also, don’t miss Laura’s webinar in June entitled, It’s All About the People: Hiring, Developing, and Retaining Great People.