4 Common Financial Reporting Mistakes to Avoid

Franchise owners often have a love-hate relationship with financial reports – you know they are crucial to success, but keeping them accurate, up-to-date, and relevant to management can be time consuming. Most franchise systems require some level of financial reporting by the franchisee to the franchisor. These reports are often used to calculate royalty payments, assess franchise performance, and are included as part of a consolidated financial package for the entire franchise. Having the proper financial reports and information available for franchise managers is important to the health of the system – helping you figure out what you are doing right and where you need to focus extra attention and resources.

While good financial reporting solutions (i.e. financial reporting software) can streamline and ease the reporting burden, it can’t do all the work for you.  It’s important to adopt good financial management and reporting habits and be aware of things that could go wrong. Critical mistakes can sneak up on you, wreaking havoc before you even know it. Don’t get caught unaware! The right financial reporting solution can help, and if you avoid the common but costly mistakes below you’ll have more time to focus on growth and be able to reap the benefits of having timely and useful management reports. Here are 4 common financial reporting mistakes that will waste time and energy:

1.) Not Providing Supporting Documents

To meet financial reporting requirements you often need supporting documents to back up the numbers on the page. Not including (or having immediate, organized access to) these documents can lead to problems if you are asked to verify the figures or if you get audited. For example, expense reports should have invoices or receipts for each entry and revenue numbers should be supported by POS data. As a part of your franchise management suite of financial software and financial reporting solutions, you may want to consider a cloud-based program that will scan/upload, organize, and store all financial documents that come into your business.

2.) Leaving Things Out

One of the most common errors in financial reporting is the act of omission, and even if it wasn’t intended, omission is the best way to get your financial reports flagged for review or audit. In order to have complete financial picture of your business, you have to document and account for everything, including revenue, expenses, inventory, timesheets, tax information, and more. With so much to keep track of, many franchise owners rely on comprehensive financial reporting software or a trusted accountant. However, you choose to track your finances, having a system in place to capture each piece of required information on a daily, weekly, or monthly basis will save you countless hours when it’s time to prepare reports. It’s always best to capture and verify information as it’s generated, not at a later time when it’s difficult to find and fix errors.

3.) Neglecting Day-to-Day Bookkeeping

One of the most important pieces of advice when it comes to making the best use of financial reporting solution is simply to stay on top of your bookkeeping. While it may seem more efficient to sit down once a week or mid-month and get caught up, the truth is it will take you less time overall if you keep up with it daily. Additionally, if you keep on top of the bookkeeping your financial reporting software will always be up-to-date and you can easily get the information you need to make good decisions.  Neglecting day-to-day bookkeeping also leads to making other common financial reporting mistakes. When you put off the bookkeeping, it’s much easier to lose or misplace supporting documents or leave things out.

4.) Not Choosing the Right Financial Reporting Software Program

When running a franchise business that requires routine financial reporting, having the right financial reporting software can help keep the business(es) running smoothly and in compliance. Good financial reporting software will organize finances, create and distribute reports, and alert you when goals are in danger of not being achieved. With so many options available, choosing the right platform can be difficult.

The key to choosing the right financial reporting software program is to find one that is user-friendly and allows you and your team to easily create and view the reports you need. One example of a modern financial reporting software program is Qvinci. Here are some of the features of Qvinci that can help guide your evaluation of any financial reporting software platform.

• Qvinci automatically syncs and consolidates your financial files from popular accounting programs such as QuickBooks, MYOB, and Xero every day. It also allows you to import and mix in Excel files if you have businesses that are not utilizing a standard accounting package.
• Using the data from each location or file, the software provides reports such as the P&L, Balance Sheet, and Cash Flow statements. Seeing the data with a standardized chart of accounts helps you visualize performance across entities.
• Owners of multiple franchise locations can compare sites and/or see consolidated reports.
• If you have or are a part of a large franchise system, Qvinci financial reporting software even also allows you to compare your numbers anonymously to best- performing similar businesses to see how you stack up. Benchmarking reports are great way to quickly see areas you can target to increase profitability.

In reality, the right financial reporting software can help you avoid all of the common mistakes by making it easy to continually update your bookkeeping and financial records without leaving out any important details. To improve your reporting success, and ultimately your business management, try to avoid these critical mistakes and use financial reporting solutions that work for your franchise.