The investor's template, again
Your social enterprise took a loan from a social investor to fund a second café, a new workshop or a van fleet. The investment agreement asks for a quarterly report: management accounts, a cash forecast, a few financial measures defined in the agreement, and impact indicators such as people employed from priority groups, hours of training, and people moved into work.
The finance manager fills in the investor's spreadsheet each quarter. The accounts come from Xero. The forecast is updated by hand. The financial measures are calculated in a side sheet with formulas she built the first time and is no longer quite sure about. The impact indicators come from the programme team, who count them differently each quarter. The report is sent a few days late, with a note apologising.
Why investor reports are hard work
| Part of the report | Where it comes from | Difficulty |
|---|---|---|
| Management accounts | Accounting software | Investor's layout differs from yours |
| Cash forecast | Spreadsheet | Rebuilt each quarter |
| Financial measures | Side calculations | Defined in the agreement, easy to misapply |
| Impact indicators | Programme records | Definitions drift between quarters |
| Narrative | Chief executive | Written last, in a hurry |
What the measures mean, and whether any condition in the agreement is met, are matters for you, your investor and your advisers. We do not interpret the agreement or give financial advice. We make the figures consistent and traceable.
What rushed reports cost
The relationship with your investor rests partly on reporting. Late or inconsistent reports make an investor more cautious, which matters when you want to borrow again or renegotiate terms.
Errors in the financial measures are the real risk. A measure calculated wrongly might cause needless concern, or hide one the board should have seen.
And impact figures that change definition each quarter cannot show a trend, which is part of why a social investor lends to you in the first place.
There is a personal cost too. In a small social enterprise the finance manager is often the only person who understands the investor template, and the report lands in the same fortnight as the VAT return, the council invoices and the board pack. When she is away, nobody else can produce it, and the investor's relationship manager starts emailing the chief executive instead.
Investor reports built from your systems
What we build connects the investor's template to the systems that already hold the figures.
- We read the reporting section of the agreement with you and write down each measure and impact indicator exactly as defined, and confirm anything unclear with your investor.
- Management accounts are mapped from your accounting software into the investor's layout, so each line is filled from the ledger.
- The cash forecast comes from your rolling forecast, in the investor's periods.
- Financial measures are calculated from the mapped figures using the agreed definitions, with the working shown.
- Impact indicators are calculated from your delivery records using fixed definitions, so they are consistent across quarters.
- The completed template is produced a set number of days after month end, for the finance manager to review and the chief executive to add the narrative.
Measures approaching any threshold the agreement mentions are highlighted for the board early, so there are no surprises when the report goes out.
The next quarter's report
Ten days after quarter end, the finance manager opens the draft report. Accounts, forecast and measures are filled, with working sheets behind them. Impact indicators are calculated the same way as last quarter, and the trend chart the investor likes has updated. She checks it against the accounts, the chief executive writes the narrative, and it is sent on time.
When the investor asks how one measure was calculated, she sends the working sheet.
Is investor reporting like this for you?
- Quarterly investor reports take days to prepare.
- Financial measures are calculated in a side spreadsheet.
- Impact indicators are counted differently each quarter.
- Reports go out late.
- Nobody can easily show how a figure was worked out.