The flash report is a mini forecast that is done for management. This report is done on a weekly basis and the purpose of it is to keep management updated on the current month's sales and any other issues that have changed from the forecast.
The flash report is the fourth and final report that management will
evaluate as it relates to the forecasted financial numbers. Forecasting
begins with the long-term plan; this will look at the next five years
of sales and costs. Next, is the annual budget. The budget predicts the
sales and costs for the current, or first year of the long-term plan.
After the budget, a forecast is done each month. The forecast will report the actual sales and costs for any months that are complete in the current year, and forecast the remainder of the year. For example, if we have just completed February, we would report the actual results for January and February and forecast the sales and costs for March through December by month. Many companies refer to the forecast as the 2+10, meaning 2 months actual results and ten forecasted. After March month-end results, the forecast would then be the 3+10.
Now we get to the flash. The flash takes the forecast and adjusts it for any known changes in sales or costs. The report is usually not very formal, but is just a few lines of information. It will show the forecasted sales and costs in summary in one column and report the anticipated sales and costs in the column next to it. Changes are shown and notes are added to the report so management can understand what is causing the changes.
This report is useful to management because they are responsible for meeting budgeted and forecasted numbers each month. If sales for the month all of a sudden are going down substantially, it is management's responsibility to react and reduce costs. Management will reduce labor hours if possible, reduce purchases and may even slow down or put off large projects.
The flash report is used to maintain tight control on expenses. Not all businesses require this report, but it is common in businesses that have a large number of direct labor employees, such as in manufacturing. In tightly controlled companies, the last thing management wants is to have to explain why they didn't react quickly to changes in sales.