Many monthly reviews follow the same pattern. Someone presents a report, the group debates whether the numbers are right, the meeting runs long, and nothing changes. A good review is short, starts from agreed figures, and ends with decisions and owners.
Before the meeting: settle the numbers
The review should never be where the numbers are argued about. Close the month first. Reconcile bank accounts, record accruals, and confirm that the actuals are final. Then prepare three comparisons:
- Actual vs. budget shows how far results are from the plan management adopted.
- Actual vs. latest forecast shows whether last month’s expectations were right.
- Forecast vs. budget for the full year shows where the year is now heading.
Break variances down by account and department, and agree a threshold, such as 5 percent or a fixed dollar amount, above which a variance needs an explanation. Below the threshold, it is noise.
Explain variances in four categories
For every variance above the threshold, record a short explanation. Most fall into one of four categories:
- Price. You sold or bought at a different price than planned.
- Volume. You sold, produced, or used more or less than planned.
- Timing. Something happened in a different month than expected and will reverse.
- One-off. An event outside the normal pattern, such as a repair, a write-off, or a windfall.
Keep the measured difference separate from the explanation. The number is a fact. The explanation is management’s judgment, and it should be recorded as such so it can be revisited.
In the meeting: decide
Spend most of the time on what to do. A useful agenda:
- Headline results against budget and forecast, in five minutes.
- The three to five largest variances and their explanations.
- The thirteen-week cash outlook and the lowest week.
- Decisions, each with an owner and a date.
- Changes to the forecast based on what was learned.
If a variance has no clear cause, the decision is to investigate, with an owner and a date.
After the meeting: update and publish
Update the forecast with any changed expectations. Leave the budget alone unless the board or owners formally revise it. Publish the report as a fixed edition, so next month’s discussion can reference exactly what was presented. If a figure is corrected later, issue a new edition rather than editing the old one.
Make it repeatable
The value of a monthly review compounds when it is consistent, with the same format, the same comparisons, and the same thresholds. Our variance review checklist captures the routine. PursuitBid keeps adopted budgets fixed, breaks variances down by account and department, and publishes report editions that retain their inputs and assumptions.
Written by the Syntonyl team. This article is general information, not legal, tax, or financial advice.