Database Lite: Exploring Options 1 & 2
Often, that existing tool is a budget, but it could easily be a monthly reporting dashboard. The spreadsheet is bloated and ungainly, and the obvious response when you’re carrying some extra weight is to go on a diet. But, maybe you don’t (yet) want to make a significant change to do that, such as implementing a full-blown database solution.
You may be using an interim solution which provides you with a direct data consolidation tool. You might have the capacity to generate flat text files out of your existing software and need something to bring that data together. Or maybe you’re on the path to a full CPM platform implementation, but you need an interim measure.
One response is to cut down the level of detail in the model and move to a more summarised approach. This can make sense where there is unnecessary misalignment between different components, such as looking at cents in the dollar in one area and rounding to the nearest $’000 somewhere else. Realigning the scale in different components of your model is a certainly a sensible starting point.
However, this response is a little like deciding to stay at home and getting pizza delivered because you’re too overweight to walk to a local restaurant. It solves ‘a’ problem (or a symptom), but it doesn’t solve ‘the’ problem. The model is no longer unwieldy, but there is a loss of flexibility and detail, and those rounded cents might actually add up to a material difference in results.
Another common response to being overweight is sign up for HIIT with a PT who pushes you past what you thought were your limits. There are thousands of options out there for input on spreadsheet structure, but it’s well worth looking at these two.
For those who don’t yet know about him, Neale Blackwood is a wizard with excel. His consulting business is A4 accounting, and you can access a wealth of tips, how-to’s and templates on their website. They also run instructional webinars, which can give you further insight into how to better structure your data and data flows. For a start, https://a4accounting.com.au/some-observations-on-structure-in-excel/ gives some insight into how to go about setting up your solution.
The FAST acronym stands for Flexible, Appropriate, Structured and Transparent, and this standard lays out ‘A set of rules providing guidance on the structure and design of efficient spreadsheets’. When producing anything more complex than a list of phone numbers, reading through the standard should be your first order of business. You can download the whole standard here: http://www.fast-standard.org/the-fast-standard/ or just get a feel for their methodology and philosophy from the resources on the website.
Weight loss and fitness companies often show us their ‘before and after’ comparisons. In a similar vein, a colleague of mine regularly asks ‘What is the end point that we (or the client) want to see?’. Defining that desired or essential output makes defining the steps that build towards that output much easier. Take it a step further and try asking ‘What decision-making will the output information facilitate?’ instead of starting from the data and asking ‘How do I make a report out of this information?’.
From an accounting perspective, a key thing to remember is that expenses and revenue need to line up wherever possible. If revenue is generated by client per fortnight, then at some level, you will need to apply expenses by client by fortnight. This isn’t always easy to do, so work towards understanding how the elements can map together to achieve that comparison.
What is your company struggling with? We will continue to explore this topic further in our next posts – drop us a line if you want to have a chat or stay in touch with our updates.