Congratulations on your decision to start an investment in Slovakia! Now that you have concluded that Slovakia is the best place to start a new subsidiary and you have gone through the process of setting up the entity and have managed to get the production running, the next important question to ask yourself is: How do I keep an eye on this investment abroad? You simply just can’t be there all the time.
When you don’t have a foreign subsidiary, you want to follow-up on how your business is doing. We can imagine that you regularly ask yourself questions like: Why aren’t we meeting the planned profits? Why does my company show high profits and still has no funds to pay me the dividends? How is it possible that our company generates free cash-flow but is also experiencing a long-term loss? Why are our sales not what we expected in our annual plan?
Thankfully, there is a solution. A high quality management report makes all the difference, which is why it is actually a good idea to invest in the set-up and maintenance of such a report.
Owners and representatives of statutory bodies of companies are interested in how their companies are doing and want to know the causes behind their performance decline. That is why they often ask themselves the above mentioned questions. But not only in these cases can a management report be helpful for you. You may just feel like you need to relax and no longer want to live with your business stress every day, but at the same time you also want to keep track of your results. A management report is also helpful if you have recently invested into the capital of a new business and want to know where the invested money is going to and how the result of this company develops.
What are your options? These series of analytical questions and answers can be completed by your company representatives personally, but it will require time, energy and multiple contacts with and between the CFOs, accountants or other people within your company. Instead, you can rely on a quality management and control-oriented report to provide your company with automated answers to most of these questions at regular and fixed intervals.
The main goal of management and control-oriented reporting is to gather information from all levels of the company, evaluate it, look for unnecessary costs, look for new profit opportunities, and discover critical points in the company. It closely monitors the structure of sales, costs, product margins, and customer and order margins.
Managerial reporting evaluates the company’s past and present, but also looks into the future. It enables you to plan how financial indicators will behave in a few months or years.
The formal aspect and content of such a report shall be consistent with the information you wish to submit. In our view, it is important – especially when it comes to reporting to owners or top management – to avoid a large number of ables and large reports that, unfortunately, may not even be read. The main output is a well-prepared summary report in the standard range of one A4, a so-called dashboardwith more detailed reports depending on your business needs, where you can find key business metrics. This will give a quick, comprehensive and truthful picture of your company’s financial situation, performance and ability to generate free cash.
With modern online tools and the ability to link financial data with all other sources of information that come from the companies ERP system, such tailor-made management reports can save you a lot of time in finding and analysing the information you need to keep an eye on your investment. It might even indicate when it is time for you to come and visit that foreign subsidiary personally to take corrective steps.
If you are interested in managing your company through quality reporting, look no further than the team of experienced VGD experts, who will tailor such a report to your information needs.
About the author:
As a 25 year-old junior Bart Waterloos left Belgium to expand the audit department for VGD in Prague. Since 2004 he has lived in Bratislava, helping the company grow to become the 5th largest audit and consulting company in Slovakia. He is currently one of the company’s four partners and is responsible for all international affairs.
14. Dec 2020 at 6:25 | Bart Waterloos