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Variance Analysis

Variance analysis is the investigation of the difference between planned and actual behaviour.  For accountants and bookkeepers that means looking at stuff once a year (hopefully more frequently) and determining whether the numbers smell right based on your knowledge of that client.  If you have a lot of clients that is a lot of dodgy behaviour to check.  Often things get missed in the noise and flagged up to late for the client to do anything about it.  Why leave it so long to have that awkward conversation?  Even better why not have a completely different conversation all together – one where you can demonstrate daily that you have your clients back and you can put plans of action into place that will make a difference now not after its all to late.

As with all things client related no two businesses are the same.  We provide you with the ability to set the pace for what you want to check for each client individually.  You can see in the example below this is a relatively small business.  I’ve asked Hindsight to notify me when there is a variance of more than £500 and 20%.  This could be above or below we check both situations.

The alert works by going back a month from today and does a comparison on the previous period.  We allow a few days tolerance to allow for weekends and Bank Holidays.

This is therefore a rolling variance analysis so you’ll know during the month if someone doesn’t smell right not month end, quarter end or worse of all nine months after the year end.  That simply won’t do.

In the alert below Directors Remuneration has taken a tumble.  As we are comparing one month period to another month period this won’t have occurred because wages haven’t been posted so far this month.  There will be another reason that requires investigation.

The Variance Analysis alert gives us an opportunity to uncover all sorts of wonderful things going on inside a clients business such as:

  • mispostings
  • missing bills
  • contracts cancelled
  • new services purchased
  • operational changes
  • strategic developments

All potential opportunities for you to wow your clients with your knowledge of the business – automatically everyday.

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