So, you just received an email that you need to prepare for a board meeting, now what? This article provides an overview of the most common financial reports for board meetings.
Here are some additional areas that should be addressed.
Rather than providing detailed tables with figures, it is recommended that you describe the business case reasons for the variances. For example, Revenues exceeded the budget because of the trend towards xxx which has increased the demand for the company’s products. Cash reserves are $xx below target because accounts receivables have increased to xx days. Several customers are now exceeding 60 days. The CFO and VP Sales have expedited payment with senior management.
Here are common key cash position statistics that should be included in the report.
- Current working capital position $
- Account receivable $ (also expressed in days)
- Accounts payable $ (also expressed in days)
- Cash position at month end $
- Current burn rate $
- Assuming targets are met the company has sufficient cash to fund operations until (date) which is a runway of
Forecast Financial Reports
Reports with current financials are important including variance. However, forecasting is even more important. Forecasting should include current and future financials (balance sheet, income statement and cash flow). Most companies build financial models in Excel for financial modeling. Your financial model should include historical financials, current financials, assumptions capital assets, and financial activity.
Provide an updated capitalization table if there have been any changes. You do not need to include regular vesting of employee and director shares or options. However, if there are plans to award shares or options to employees, directors or consultants then provide a table with the number of options/shares, besting details and a summary of the total share/option pools.
A few keys reminders and example reports
- The time period may vary depending on the board members preferences (monthly, quarterly, etc)
- Include the time period in the title of each report
- Create a descriptive title so it is easy to understand the time period
- Provide a brief explanation for variances.
Budget Comparison for Month and Year to Date
Cash Flow Summary
Balance Sheet Summary
As always, it is beneficial to have trusted partners to assist you. Headway, LLC is here as an extension of your team to provide valuable insight based on our years of experience. Contact us today for your free evaluation.