“Polling isn’t science. Neither is accounting. What information are you relying on in your business that might not be accurate?”
–Phil Symchych
The ongoing US election demonstrates the lack of scientific precision in polling.
The premise of 95% accuracy assumes honesty in all respondents and an accurate sampling of the entire population. However, honesty isn’t always available and sampling is just that, it’s a sample. Sampling work best on homogeneous populations. Fortunately for all of us, the US is not homogeneous.
In accounting, there are about 75 potential ways to value inventory. Not all of them are acceptable to the accounting rules of any particular country, but the methods exist. In other words, there are lots of options that require professional judgement to evaluate and use. The results of each option will vary. Those variances can influence decisions and may be detrimental to results.
What are the real numbers you need to know in your business?
They are the daily and weekly numbers that make up a Flash report: sales, production, and cash flow.
Figure 83.1 Flash numbers
Sales are easy to measure. How much did you sell today in confirmed orders?
Production gets more complicated. Ideally, it measures outputs. How much was produced or shipped or even processed by specific departments?
Cash flow is also easy. How much came in and how much went out? What is the ending balance?
These numbers are not subject to accounting rules or judgement. They are all highly measurable with minimal error.
The flash numbers are like votes. You know they’re real and there isn’t disagreement or variability that can result in bad decisions and bad results.
What information can you measure and improve in your business that will lead to better decisions and better results?
Full speed ahead!
Thanks for reading.
