Daily Profit and Loss

The Problem

The business has a number of financial services operating businesses with a holding company and a shared services. These businesses include asset management, micro lending, stockbroking, advisory and more.

The operational businesses were reporting successes and gains in meetings to the executives but these profits were not flowing through to the bottom line. This was due to:

• Deals being negotiated but not actually being taken up
• Deals with good margins eroded after all transaction costs were accounted for
• The lack of reporting on loss making deals
• Excessive overheads eroding the profits in the business units

The Solution

• Certain monthly overheads were filtered out so that large variances to budget would not create noise for most of the month. The budgeted amounts were only reported on the date that the overhead was expected to be booked. In this way variances become more relevant.
• A daily profit and loss model was built to provide visibility of deals at the income statement and balance sheet level.
• The granularity was at the detailed accounts in the P&L

Benefits

• Within 1 year, management reported +- 10% improvements in group profits.
• Management were able to manage and control both the revenue and expenditures on a daily basis.