Information as an Easy Management Tool
Taking the time from your busy day to produce and track information isn’t easy—and often the first thing to neglect when the to-do list is longer than the hours in the day. It seems that there is either an over abundance or a lack of information available to make management decisions. Not to mention deciding what information is relevant, and whether it is current enough to make a difference. Oh and let’s not forget the most important issue…once gained, how can the information help manage the company to meet its objectives, both internally for management and externally for potential lenders and investors?
Challenges surrounding information often include:
• Having the time to collect the data
• Making sure the data is accurate
• Making sure the data is produced quickly enough to be relevant
• Knowing what to do with the information once it is produced—i.e. Using it as a decision-making and a growth tool
Making a consistent plan to produce and track information is vital in today’s fast changing educational environment.
Weekly Data Collection
With today’s educational management systems, it is not difficult to access current information about how your company is doing. The most important decision might be deciding what information to pay attention to. Key indicators gained weekly about the company’s operating performance are critical to successful financial management. The following information should be reviewed and acted upon on a weekly basis, preferably no later than a few days following the end of the current week.
• Gross Revenues (Or tuition and other charges less credits and discounts)
• Accounts Receivable
• Salary Expense (Dollars spent and as a percent of Gross Revenues)
• Occupancy (Can be calculated by several different methods, as long as the calculation is consistent and trends can be tracked)
Monthly Financial Statements
Complete financial statements should be prepared monthly, or preferably every four weeks--making 13 4-week financials annually, instead of 12 monthly financials. Four week financials statements are easier to use for comparing period to period with like number of days, and for ease in matching income and salary expense. Financial statements need to be completed within two weeks of the period end to make the most of management’s ability to react to issues quickly. Although weekly key indicators are the most important management tool, full financial statements will give a complete picture of the company’s overall success managing income and expenses.
Another useful tool is preparing an annual budget and comparing it with the actual results. This tool can keep the business on track and indicate whether the company’s goals are being met.
Annual auditing of the company financial statements should be considered by any organization seeking funding or considering selling in the next few years. Auditing lends a level of credibility to the financial statements that is appreciated by lenders, investors, and potential buyers.
Using Information to Make Management Decisions
Many companies are strong in producing accurate, timely data, but weak in putting it to good use. Weekly information is the most important for making quick changes. Noting a drop in income, increase in accounts receivable, or increase in salary expense must be recognized and acted upon within days to avoid long-term issues. Training management staff to use this information to make adjustments is one of the most important things to do, both in developing healthy financial practices for the company, and in growing its people to make sound financial decisions.
It is not only important to track your financial data in a timely and accurate matter, but just as important to review this data and take action weekly, monthly and annually. With the software and technology available today, Childcare operators should have all this information available at their finger tips in order to make important management decisions. If you have any questions about this article or need help in finding software designed for childcare operations contact us at firstname.lastname@example.org or visit our preferred childcare business software provider at www.treellc.com.