In the world of finance, our obsession with month-end numbers has long been a staple of financial reporting. However, it’s time to reconsider this practice and explore how it might be detrimental to effective finance business partnering. In this article, we will delve into the reasons why we need to shift our focus away from the constraints of month-end reporting and embrace a more forward-thinking approach that centres on trends.
The Month-End Struggle
1. Time Crunch
One of the primary issues with the month-end ritual is the tight timeframe between closing the books and presenting reports. There’s often not enough time to analyse the data thoroughly and transform the ‘what’ into the ‘so what’—the valuable insights that drive informed decision-making.
2. Drowning in Noise
Month-to-month numbers are plagued by noise. Businesses experience fluctuations due to various factors, many of which are accounting nuances such as phasing, accruals, and one-offs. These factors often have little to do with the actual commercial health of the organisation.
3. Historical Focus
By the time the month-end reports are ready, other departments like sales, marketing, and operations have already moved forward. They are primarily interested in what lies ahead and how they can use past data to shape the future. The historical perspective becomes less relevant in this context.
A Better Way Forward
So, how can we overcome these challenges and ensure that finance truly partners with the business to drive growth and success? The answer lies in shifting our focus towards trends, specifically a 12-month moving average trend.
Why Trends Matter
1. Noise Reduction
One of the immediate benefits of looking at trends is the elimination of noise caused by phasing, accruals, and one-offs. Trends smooth out these irregularities, making it easier to identify the genuine commercial drivers behind the data.
2. Month-End Independence
With a trend-based approach, your analysis is not contingent on the current month-end results. You can focus on the trend’s trajectory between month-ends, providing a more stable foundation for business partnering discussions.
3. Future-Oriented Conversations
Having a historical trend at your fingertips simplifies the process of extrapolating scenarios. Instead of dwelling on what happened in the past, you can shift the conversation to explore what could happen next, driving a more forward-looking mindset.
Breaking Free from Month-End Shackles
In summary, it’s time for finance professionals to break free from the constraints of month-end reporting. While month-end numbers have their place, they shouldn’t dominate our approach to finance business partnering. Trends, particularly the 12-month moving average trend, offer a more stable, noise-free, and future-oriented perspective that aligns with the needs of modern businesses.
✅ Accountants may deal in month-end data, but the real influencers are those who harness the power of trends to drive informed decision-making and steer organisations toward a brighter future. Embrace the shift, and you’ll find that finance business partnering becomes more valuable and impactful than ever before.
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