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| Financial Reporting for Multiple Divisions | Views: 862 |
| Jan 17, 2008 8:49 pm | | Financial Reporting for Multiple Divisions | # |
Sherill Watts | | I am helping a friends growing company and am trying to show them the importance of accurate tracking of income/expenses separated by their two separate divisions.
They currently track everything as one unit and do not have a good read on the profitablity of any one division vs. the other.
They don't want to take my word for it.
I am looking for some documentation to back up what I am saying.
Does anyone have any examples of such reporting done by other companies. Private Reply to Sherill Watts |
| Jan 20, 2008 3:38 am | | re: Financial Reporting for Multiple Divisions | # |
Jayant Tewari, OutSourced CFO | | What you're talking about is Divisional Level Accounting / Project Accounting / Cost or Profit Center Accounting - all of which has been done from ages and ages by every Company of reasonable size.
A Google Search on any of the terms I've listed above should give you loads of literature ...
I'm surprised they don't see the logic of your reccommendation .... maybe you should send them over to me for me to enlighten them, in all senses of the term ....
just kidding ... you're certainly giving them great advice.Private Reply to Jayant Tewari, OutSourced CFO |
| Jan 20, 2008 2:03 pm | | re: Financial Reporting for Multiple Divisions | # |
Vijay Kumar | | Financial reporting for multiple divisions for each division separately helps the organisation to assess the operations of divisions separately. The results of the divisions can be consolidated to present a consolidated picture.
Any good standard accounting software should be able to cater to this requirement.
In my client's company, the accounting system is designed to give division wise results and then consolidated picture. The company is happy about it.
Infact, we are splitting the accounting activities of another company into division wise as its activities are all clubbed together with the result they are not able to assess the performance of their contract manufacturing and own manufacturing activities
Care should, however, be taken to see that the basic data entry is done in the appropriate divisions.
Thanks and regardsPrivate Reply to Vijay Kumar |
| Jan 21, 2008 1:15 am | | re: Financial Reporting for Multiple Divisions | # |
Donna Gibson | | My first question is if these are technically "separate divisions" operating under one employer i.d. and one literal incorporation? If not then tell them they have to separate their accounting - no ifs ands or buts.
If they are truly like a southern division and a northern division, then in Quickbooks for instance, tracking by class can be very handy.
Do the "divisions" share a checking account and other banking services? How many and what type resources used overlap between the "divisions"?
I've found that sometimes when they don't want to know the real financials of the separate divisions, it's an indication they already know/suspect a "pet" division isn't doing well and really don't want to see the facts. Subconsciously they avoid the unpleasantness.
But you're advice is right on target - see them separately whether broken into totally separate databases or reports by class or something. Hold your ground!Private Reply to Donna Gibson |
| Jan 21, 2008 8:03 pm | | re: Financial Reporting for Multiple Divisions | # |
Steve Novak | | Good advice. I don't know about documentation, it's just a given to me. I'm helping a small contracting company track profitability by job, instead of lumping everything together in a yearly profit/loss. It really opens people's eyes. Depending on the business, profitability by product line, or even individual items makes sense.
Steve Novak
PPR Management Services
Improving Profits by Improving Performance
http://www.pprmanagementservices.com
Let's Talk Business!
http://letstalkbusinessblog.blogspot.com
Private Reply to Steve Novak |
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