Strategic Management Accounting and Performance Management

We are well versed with Strategic Management Reporting and Performance Management customized to an enterprise’s size & nature of business and its uniqueness which contain financial data and top and bottom-line nonfinancial indicators that correlates directly with the financial & market success of a business with an appropriate focus on both long & short term, necessary and valuable for ongoing monitoring of the business. These reports supply comprehensive financial information “behind” the Standard Financial Statements. This could take many forms including but not limited to: Ratio Analysis; Flash Report (Dash Board Report); Budget Performance Report (Variance Analysis); Segment Reporting; Value for Money Assessment; Performance-Based Reward Scheme; Critical Success Factors (CSF) & Key Performance Indicators (KPI) Analysis and Performance Management Models (Balance Score Card, Building Blocks, Performance Pyramid, The Prism).

In providing services to our clients, we pay keen interest in the strategic role of management accounting as a discipline for planning and controlling performance so that strategic objectives can be set, monitored and controlled using concepts like Performance Hierarchy, Critical Success Factors and Key Performance Indicators and models like SWOT analysis, Boston Consulting Group, Porter’s generic strategies, benchmarking, among others

In doing these we appreciate the strategic context of performance management and the impact of wider factors by recognizing the impact of external factors on strategic management issues, such as macro-economic, fiscal, market and environmental impacts on performance, using models such as PESTEL and Porter’s 5 forces, taking into account the risks these factors present and how they can be measured and managed.

In helping our clients solve their performance management problems, we help them manage the issues relating to performance management information systems and their design, proactively addressing the impact which developments in technology have on the performance management and measurement systems used by our clients.

Top on the list of our strategies for helping our clients manage their performance is the application of high-level performance measurement and management techniques in a variety of contexts, including not-for-profit organisations and multi-national businesses like: the ‘balanced scorecard’ approach as a way in which to improve the range and linkage between performance measures; the ‘performance pyramid’ as a way in which to link strategy, operations and performance; the Building Blocks that considers performance measurement in business services using building blocks for dimensions, standards and rewards; Activity-based and value -based performance management approaches, etc.

In doing all these we take a holistic approach considering financial and none financial, internal and external, quantitative and qualitative as well long term and short-term indicators of performance, factors and objectives, taking into account the strategic roles human resource management and quality management plays in performance measurement and management

All these enable us to accurately, effectively and efficiently assess and control the performance of our clients, including the recognition of whether a business is facing difficulties or possibly failure thus with high degree of precision, we design failure preventive measure, recovery and or turn around strategies in effective and proactive ways using meaningful Financial & Management Reports as explained below

MEANINGFUL FINANCIAL AND MANAGEMENT REPORTS

These report provide an entity: Profit Oriented as well as Not for Profit and Hybrid entities with management/programme discussions and analysis on various aspects of performance like marketing activities; trend reports; financial viability, profitability, operational efficiency, effectiveness & economy; resource utilization; productivity, liquidity, growth and outreach indicators, customer satisfaction, innovation, flexibility; impact & Outcome indicators like poverty levels, household income, employment, health indicators, literacy etc. that enable management to not only take the pulse of the business/project and know very quickly how healthy the business/programme is, but to continuously make incisive, precise and data driven financial, programme & management decisions which is crucial for survival, growth & development in the increasingly competitive, rapidly changing complex business and development environment.

The basic financial statements

The basic financial statements as provided by the accounting profession, and used by almost every entity, do not provide management of any entity with the financial information necessary to make incisive and precise financial management decisions. While basic financial statements are important, it is critical that these financial statements be prepared in a format which takes into account the uniqueness of each entity. Furthermore, financial management reports, in addition to basic financial statements, are essential in order to manage any entity.

Management Reports

Management Reports which contain financial data not detailed in Basic Financial Statements are necessary and valuable for ongoing monitoring of the practice. These reports supply comprehensive financial information “behind” the Basic Financial Statements. For example, in a medical practice business, included in management reports are reports on clinical activities, accounts receivable and collections, physician productivity, physician charges, charges for ancillary services, compensation by physician, trend reports, payer mix reports etc.

These reports can be even more important, than the basic financial statements for quick decision making. If a medical practice is underperforming financially, the basic financial statements will show only revenue and expense, and assets and liabilities—the symptoms. The practice administrator can observe that revenue is down compared with prior years. Likewise, the administrator can observe that expenses are higher. If revenue is down and expenses are higher, then net income of the practice will obviously be down.

What is not visible in the Basic Financial Statements is, “Why is revenue down?”, or “Why are expenses up?” The management reports must act as “tests” to discover the real cause of the disease. It’s therefore very important that practices provide physicians with strategic financial management reports in addition to Basic Financial Statements.

Flash Report (Dashboard Report)

A Flash Report (Dashboard Report) can provide a quick summary of key points in an easy-to-understand format. The Flash Report is ideally a single page report presenting summarized financial data and Top and Bottom-Line Indicators.

A Bottom-Line Indicator is a key piece of financial data that correlates directly with the financial success of a practice. For example, Bottom Line Indicators could include patient encounters, collection ratios, days in accounts receivable, RVU’s, number of procedures or cases, revenue per unit (RVU or ASA), charge out rates, new patients, average visit per day, relative value units etc. Bottom Line Indicators are most meaningful when compared with prior years, or benchmarks.

The Flash Report often is the favorite report of the physician. The physician can look at a one-page summary and quickly take the pulse of the practice. Depending on what’s contained in the Flash Report, he may know the amount of cash in the bank, the accounts receivable balance, the amount owed to the bank, days in Accounts Receivable, number of encounters, net income for the period, and many other things.