2 Excel Templates

1) Employee Bonus Scheme Model​​

Here is an example of the process:

1.

The targeted net bonus is determined by the director or supervisor with the director’s approval, and it amounts to X monthly salaries.

2.

There are two groups of employees:

1) employees with commercial goals related to finding new jobs, and

2) employees without commercial goals.

Employees with commercial goals receive 50% of the bonus based on achieving the targeted added value and 50% based on achieving personal goals.

Employees without commercial goals receive 100% of the bonus based on achieving personal goals.

3.

Goal basis:

Added value as a goal is calculated based on sales revenue or similar metrics and is expressed in absolute amounts.

Personal goals – the rating for personal goals is the average rating from the evaluation form, excluding the added value rating. Ratings can range from 1 to 10 (or 0-100%).

4.

The bonus consists of two parts: First part depends on commercial objectives (for commercial staff only) and second part depends on personal objectives achievement.

5.

Company adjustment factor (changed annually based on market potential and other circumstances).

1.25: If there is net profit growth of 15% or more, otherwise, the adjustment factor is 1

0: If there is a net profit decrease of 50% or more or in case of bankruptcy.​​

Click here to get your Excel template

Alternative model (based on predefined sum to total bonus)

The model can be adjusted very easily for any company. Keep you posted for the rest of the templates.

2) 13 Week Cash Flow Forecast​​

Click here to get your Excel template

Here are 2 Infographics for Today:

1) Corporate Finance Handbook

Get this infographic on a high-resolution PDF​​​​​​​​​​​​​​

2) Buying vs Leasing

Get this infographic on a high-resolution PDF ​​​​​​​​​​​​​​​​​​

Here’s today’s “How to” guide:​​​​

How to make perfect insights based on monthly reports for your management or stakeholders.

It’s essential to conduct a thorough analysis that not only reports numbers but also tells a story.

This story should highlight what happened, why it happened, and what actions need to be taken going forward.

One of the most effective tools for this type of analysis is variance analysis, which helps identify the key drivers behind deviations from expected performance.

Here’s a detailed framework on how to craft perfect insights based on monthly reports, focusing on answering key questions that provide clarity and direction for management based on movements and variances in the reports:

When we do this monthly snapshot, of course, we focus on actuals and compare it with budget, previous month, and same month last year.

This is my favorite flow when approaching this:

1. 𝗖𝗔𝗨𝗦𝗘: Why Did the Variance Occur (Drivers)?

The first step in variance analysis is to understand the cause. It’s not enough to report that performance deviated from the budget or forecast; you need to explain why it happened.

Key drivers

Look at the main elements contributing to the variance. Was it due to changes in volume, pricing, cost structure, or external factors like market conditions?

Categories

Break down the variance into categories (e.g., revenue, costs, operating expenses) and examine what drove the positive or negative performance within each.

Underlying reasons

Were there changes in operational processes, supplier issues, or customer behavior that influenced the numbers?

Clear and concise identification of the key drivers behind the variance will give management the context they need to make informed decisions.

2. 𝗨𝗡𝗨𝗦𝗨𝗔𝗟 𝗜𝗧𝗘𝗠𝗦: Did One-Time or Non-Recurring Items Affect the Differences?

One-time or unusual events can often distort the results, making it important to call these out separately.

When analyzing monthly reports, ask whether non-recurring items contributed to the variance.

Identify non-recurring events

These could include legal settlements, large one-time sales, or a temporary expense. For instance, a one-time discount given to a key client may inflate sales for the month, making the variance appear larger than it should be.

Adjust for future projections

If unusual items are identified, you can exclude or normalize them when projecting future performance to provide a clearer trend.

Clearly distinguishing between regular operational variances and those caused by exceptional items ensures that management doesn’t misinterpret the results.

3. 𝗔𝗖𝗖𝗢𝗨𝗡𝗧𝗜𝗡𝗚 𝗖𝗛𝗘𝗖𝗞: Is There Inconsistency in Accounting Recognition or Accruals?

Once the causes and unusual items have been addressed, it’s important to validate the accounting treatment. Discrepancies in how revenue or expenses are recognized can lead to significant variances, so this step ensures the accuracy of the analysis.

Accrual vs. cash basis

Verify whether transactions were recorded in the correct period. For example, a revenue that was booked early or an expense that was recognized too late can distort month-over-month (MoM) performance.

Accruals

Were all necessary accruals recorded? Failure to account for expected expenses can create a misleading picture of profitability.

Reversals or corrections

Have any prior-period adjustments affected the current month’s figures? An accounting check ensures that the numbers are reliable, providing a solid foundation for analysis.

4. 𝗦𝗜𝗚𝗡𝗜𝗙𝗜𝗖𝗔𝗡𝗖𝗘: How Does the Variance Impact the Business and to What Extent?

Once you have identified the drivers and ensured accuracy, the next step is to assess the significance of the variance. Management needs to know how material these deviations are in relation to overall business performance.

Materiality

Evaluate whether the variance is significant enough to warrant further attention. Small deviations may not have a meaningful impact, while larger ones might indicate serious issues.

Impact on KPIs

Assess how the variance affects key performance indicators (KPIs). For instance, a significant increase in operating expenses might directly reduce profitability, while a decrease in revenue could signal a drop in demand.

Long-term vs. short-term

Clarify whether the variance has long-term implications or if it’s just a short-term fluctuation. This step helps prioritize issues that require immediate attention and those that can be monitored over time.

5.𝗧𝗥𝗘𝗡𝗗𝗦: What Are the Trends for Further Increase/Decrease of the Variance?

Management will also want to know whether the variance is a one-off or part of a larger trend. Identifying trends allows businesses to forecast future performance more accurately and make proactive decisions.

Historical trends

Compare current variances to historical data. Is this a recurring issue? For example, does the company consistently overspend on marketing during specific months?

Future projections

Based on the identified trends, what can be expected in the upcoming months? If costs are increasing, will they continue to rise, or was this month an anomaly? Seasonality

Account for seasonal trends that may explain fluctuations. Understanding trends provides management with insights into whether corrective action is needed or if the business is likely to revert to normal performance levels.

6. 𝗔𝗖𝗧𝗜𝗢𝗡𝗦: What Actions Can Management Take?

The final and most critical part of the analysis is providing actionable recommendations. Insights without action are not valuable, so it’s crucial to translate the analysis into tangible next steps for management or stakeholders.

Corrective actions

What specific actions can management take to address negative variances? This could include adjusting operational processes, renegotiating supplier contracts, or changing pricing strategies.

Strategic opportunities

Are there opportunities to capitalize on positive variances? For example, if a new marketing campaign led to an unexpected sales increase, should more resources be allocated to this initiative?

Monitor and follow-up

Recommend how management can track progress on these actions and ensure that the business stays on course. Providing clear, data-backed recommendations helps management move forward with confidence.

CONCLUSION

Crafting perfect insights from a monthly report requires a structured approach, focusing on key elements such as causes, unusual items, accounting checks, significance, trends, and recommended actions. By following this flow, you can create a report that not only highlights what happened but also explains why it happened and what the business should do next. This type of insightful analysis will allow management or stakeholders to make informed, data-driven decisions, driving better performance and results in the future.