Do you spend a lot of time reviewing stacks of reports each month so you can get the information you need to make decisions? Do you find out after the fact that something went wrong in your business and that if you had known about it sooner, you would have made different decisions?

If so, you might benefit from a special type of reporting called exception reporting. Exception reporting highlights red flag areas that you need to take action on. It contrasts with regular reporting, which lists lots of data that you may or may not need to take action on.

Here’s an example: How often do you check your bank balance? You probably check daily or even more, right? Do you really need to?

Ask yourself when do you really need to know about your bank balance? You need to know when it falls below a certain amount, or when you don’t have enough to cover imminent bills, right? Why create an alert that will send you an email or text message under the conditions and criteria you set? This will save you time.

Some exception reports are already built into some accounting systems. A couple of good examples are the A/R aging report that shows past due invoices that have not been collected, and the inventory re-order report that lists inventory items that reached their re-order points and need to be re-ordered.

There are many ideas to generate exception reports:

  • Missed and upcoming deadline tracking, such as project due dates, tax forms due, and payroll due
  • Employees on vacation
  • Bills overdue
  • Expiration date tracking like end of lease and insurance policy renewal dates
  • Large variances in budget to actual reports

To take advantage of exception reporting, here are a few steps:

  1. Identify the reports you currently receive that you review but take no action no matter what. Do you really need them? If not, throw them out. If so, ask yourself what trigger would have you taking action, then create an exception report that reports on that trigger.
  2. Think about what data you access all day that is not in a report or easy to use format.  Can you create an exception report or alert out of it and save yourself time?
  3. What information would you like to start receiving that you don’t have now?  It should be something that you would take action on if you knew about it.  Can you create an exception report for these new information needs?

Implement exception reporting throughout your business, and watch your time free up and your management decisions sharpen.

If you need help making exception reporting work in your business, or with bookkeeping in general, call Innovative Financial Services, LLC! We have the resources and expertise you need to better manage your business and maximize your profits. Contact us today for a free, confidential quote.