Why have department specific profit and loss accounts (P&L)
When looking at the package of services we provide our clients, one thing that regularly comes up is the need for departmental profit and loss accounts. It is something that can be neglected in the busy month end period of an in-house accounts department in favour of getting the core figures signed off and approved. More commonly, as your business grows to new income streams, locations or through acquisition, it might not be something that you’ve considered or had time to implement.
We work with clients who we provide the full virtual finance department service to, but also clients with an in-house accounts team in order to support them with their department specific financial information.
A large number of businesses can benefit from some form of channel/department specific reporting whether your business is large or small, has multiple department heads or just yourself and one or two members of staff.
Case study – how can a small-medium food and beverage business benefit from more detailed broken-down reporting?
In the case of this case, we would be looking to break down the event catering, the in-venue offering and artisan market trader into separate pieces of reporting. Each outlet has different overheads and often different prices. In the case of 2/3 of the channels the owner manager runs them, but the in-venue has an employed manager and staff.
As well as the owner being able to properly assess which channels work it is a platform to review with the manager how things are going and set targets and performance objectives for them.
Case study – why does my retail/e-commerce business need department specific P&L’s?
Running each department as its own profit and loss centre empowers managers and teams to develop their own business area. As an owner/director it allows you to focus on what is working and where there is room for improvement.
Any future sale of the business will also benefit from department specific profit and loss accounts also as it will provide clear incite during due diligence for any potential acquisition.
This is completely dependent on the size of your business and the volume of transactions. You want your data to be meaningful and useful. We can advise you as to whether monthly, quarterly or bi-annually is appropriate for you.
We don’t just provide an excel sheet full of figures, we draw out some of the key takeaways for you to consider highlighting any useful information, in an easy to digest format relevant to you and your business.
