Specialised practice
MIS / EIS & Budgetary Control Systems
Most businesses do not lack numbers. They lack the two or three numbers that would actually change a decision, arriving early enough to act on and reconciled to something they trust.
A management information system is not a set of reports. It is the answer to a prior question — what decisions are being made here, by whom, and how often — expressed as the smallest set of figures that informs them. An executive information system is the condensed version of that for whoever runs the business, usually one page. Budgetary control is the loop that closes it: a plan set in advance, actuals compared against it, and the difference explained by someone who can do something about it.
The common failures are recognisable. Monthly figures arrive six weeks late, by which time the month is beyond influence. Reports are produced that nobody reads because they answer no question anyone is asking. Numbers in the management report do not tie to the books, so the first twenty minutes of every review is spent arguing about which set is right. A budget is prepared once, filed, and never referred to again.
This is work the proprietor did inside a large public sector manufacturer for several years — annual revenue and capital budgets, monthly estimated results, variance analysis, and the monthly management reporting that went to the board. The same structure scales down to a business of any size, and it usually works better small.
Management and executive reporting
- Establishing the decisions the reporting has to support, before designing anything
- A defined monthly reporting pack, with each report answering a stated question
- A one-page executive summary for the proprietor, partners or board
- Segment, product, unit and cost centre reporting
- Key indicators chosen for the business rather than adopted generically
- Exception reporting, so attention goes to what has moved
- Reconciliation of every management figure to the books of account
Budgeting and budgetary control
- Annual revenue budget, built up rather than extrapolated
- Capital budget, and the phasing of committed spend
- Cash budget and funds flow, including the working capital cycle
- A budget calendar, so preparation and approval happen before the year starts
- Responsibility accounting — each line owned by someone who can influence it
- Monthly variance analysis, separating price, volume and efficiency effects
- Rolling forecasts and revised estimates as the year develops
- Estimated financial results ahead of the audited position
Design, implementation and upkeep
- Chart of accounts and cost centre structure aligned to the reporting required
- Identifying data sources, and who is responsible for each input
- Templates and working papers that the client’s own staff can operate
- Running the cycle alongside the existing process until it is stable
- Training the people who will maintain it
- Periodic review, and revision as the business changes
- Documentation, so the system does not depend on one person’s memory
When this applies
Situations this covers
The business has outgrown what one person can hold in their head
At a certain size the proprietor stops being able to sense the position directly. That is the point at which reporting has to be built, and it is better built before the need becomes acute.
The monthly figures arrive too late to be useful
A report that lands six weeks after month end is a historical record. Getting it out in the first week usually needs the closing process reorganised, not the report redesigned.
The management figures do not tie to the books
Where two sets of numbers exist, neither is trusted. Reconciliation is built into the reporting itself so the question stops arising.
A budget is prepared and then ignored
A budget without a monthly comparison and a named owner for each line is a document, not a control. The loop is what makes it work.
A lender or investor wants regular reporting
Facilities increasingly carry information covenants. Reporting built for the business can usually be made to serve the lender as well, rather than maintained twice.
Several units, and no way to compare them
Where branches or units report differently, comparison is impossible. A common structure and a common cost centre scheme come before any analysis.
Method
How the work runs
- 01
Establish what the reporting is for
Which decisions, made by whom, at what interval. A report that cannot be traced back to a decision does not get built.
- 02
Fix the underlying structure
Chart of accounts, cost centres and the closing calendar are settled first. Reporting built on a structure that cannot carry it will not survive contact with the second month.
- 03
Design the pack and agree it
Report formats, definitions and the source of each figure are set down and agreed before anything is produced, so that definitions do not drift later.
- 04
Build the budget and the control loop
The budget is built up from operating assumptions, with each line assigned to an owner and a monthly comparison scheduled from the outset.
- 05
Run it in parallel
The new cycle runs alongside the existing process for a few months, so that errors are found while the old reporting is still available.
- 06
Hand over, then review
The client’s own staff operate the system, with documentation and training. It is reviewed periodically and revised as the business changes shape.
Questions
Commonly asked
General information on procedure. It is not advice on any particular matter.
What is the difference between MIS and EIS?
A management information system serves the people running the operation — detailed enough to act on, produced daily, weekly, fortnightly or monthly, and usually several reports. An executive information system is the condensed view for whoever is accountable for the business as a whole: typically one page, a small number of indicators, and designed to be read in a few minutes. The second is drawn from the first, not prepared separately.
Our accountant already sends monthly statements. How is this different?
Monthly financial statements record what happened, in the form the accounting standards require. Management reporting is built the other way round — starting from the decisions being made and working back to the figures that inform them. The two draw on the same books, and one of the objects here is that they always reconcile, but they answer different questions.
Do we need to buy new software?
Usually not. Most of what is needed can be produced from the accounting package already in use, together with structured spreadsheets, provided the chart of accounts and cost centre structure will carry it. Where a change is genuinely warranted, that is said plainly and the cost flagged before anything is committed.
How long before it is useful?
The first version of a reporting pack can usually be produced within a cycle or two. Budgetary control takes longer to become useful, because it needs a plan set in advance and at least a few months of comparison before the variances start to mean anything. The structural work — chart of accounts, cost centres, the closing calendar — comes first and is what determines how quickly the rest follows.
Who maintains it afterwards?
Your own staff, in the ordinary case. The system is designed to be operated by the people already doing the accounting, with templates and documentation, and training is part of the engagement. The firm can continue to prepare or review the pack periodically where that is preferred.
What does it cost?
Professional fees depend on the size and structure of the business, the state of the existing records, and whether the engagement is a one-time design or includes running the cycle. Scope and the basis of fees are agreed in writing before work begins. Fee rates are not published on this website.
Do you know where the business stands this week/fortnight/month?
If that takes more than a few minutes to establish, it is usually a reporting problem rather than an accounting one.
Related services
- DPR & CMA ReportsPreparation of Detailed Project Reports and CMA data for bank credit, term loans and working-capital facilities.
- Accounting & BookkeepingBooks of account maintained to statutory standards, with periodic financial statements.
- Business & Tax AdvisoryAdvisory on business structure, transactions and the tax consequences of proposed decisions.
- Payroll & HR ComplianceEnd-to-end payroll processing together with the statutory compliances that attach to employment.