What makes a financial report a valuable one? A question which is in my view not asked enough.
We, the #finance community and its customers, tend to stick to the way reports have been produced in the past. Information that was once considered important is still considered as such, and traditions are hard to kill. But your customers demands may have changed, your leadership may have rotated, you boss may have left. A great opportunity to reassess where your organization is regarding Financial Reporting Maturity.
First of all, any report needs to meet one or more of the following conditions:
- Be used for decision making (or trigger decision making)
- Is used to hold people or teams accountable
- Gives a clear view of past or future performance
- Focuses on the key story of the period and the drivers for the variances
- Gives a balanced view (thus is not too detailed, nor too high level)
- Has a summary / dashboard / snapshot for the user to see in one view the performance of a unit or a budget (before diving in the hardcore detailed numbers).
- Reports are error proof and quality checked (preferably through automated checks)
- Clearly indicates the periods it is comparing and the currency
- Has a clear title
- Uses graphics (e.g. charts) where possible
Have a look at this simple income statement below. It is relatively high level, yet it shows the key drivers, allowing the users to understand immediately in one overview what happened during this month. Simple is so nice…
To get to this end-game, my approach would be to follow this simple step plan:
- List all reports your organization currently produces
- Determine the criteria that your reports need to meet according to your professions standards and your stakeholders/customers. I can think of:
- Talk to your stakeholders and customers about what are crucial vs nice to have reports, talk to them about the frequency and the level of detail required
- Publish the reporting time table and intervals of reporting centrally so your users know when to expect your updates (and stick to your own timetable)
- Inevitably there will be ad-hoc reports, make sure you have a template ready to cover the most common queries, but do not publish them
- Print the most crucial reports, the rest post them centrally on a sharedrive or web-room where your customers can access them without having to ask your team.
Below a list of crucial reports that we believe should be valued in any industry or business:
- Sales and Margin performance for Top 10 or Top 25 customers
- Monthly P&L vs Plan / Forecast (summary / by line item)
- Working capital report (Totals and in Days)
- Forecast Accuracy
- Departmental Budget vs Plan / Forecast in Summary and in Detail by Department owner
- #cost of Quality
- … and others that are critical for your business or industry
Finally a very simple note to remember: Finance has only a few tangible products to deliver, make sure that all of them are both of the highest standards in terms of quality of the information itself as well as the layout. This last one is perhaps more important than many of the numbers themselves. And keep it simple 🙂
I look forward hearing your feedback!
On behalf of Kingcashcow June 2013