Four Gathered Reviewing Report

Focus your financial reporting systems on their true intended purpose: decision making.

Operations

Put Your Financial Reports to Work for Your Organization

  • Will Schmidley IV
  • 12/21/2018

Financial management reports contain a treasure trove of information. But too often these reports are not universally adopted across an organization, or worse, go unused completely. How do you ensure that our financial management reports deliver the maximum amount of value to the users — and your organization?

Cross-functional readability

Perhaps the biggest factor in delivering valuable reports comes when the reports offer easy visibility into the areas that matter most to each user within your organization. Thoughtful consideration needs to be given to how data is summarized and served up to users.

1. Set up the rows to bring visibility to management issues

The management report can be significantly influenced by the chosen row descriptors, so make sure to choose descriptors that are easily understood, so that no one is confused by the numbers in the report. That means you’ll want to avoid using accounting or industry jargon. For subtotals, these descriptors will often become key indicators that will emerge as the common language for describing performance. Also, ensure that reported numbers are neither too large so as to obscure what elements are included in the figures, or too small to distract attention away from more important accounts.

2. Include non-financial metrics

Separate rows should be set up at the top or the bottom to track key non-financial metrics to help establish context.

  • Be judicious in selecting only a handful of metrics that truly drive performance — it could be volume, price, number of staff, or operating availability.
  • Create ratios using non-financial and financial metrics to enhance comparability between periods.
  • Make sure the non-financial information is reliable and can be easily tracked

3. Format your reports to highlight issues

Your financial reports needs to enable management decision making.

  • Include variance columns expressed in terms of dollars and percentages against the established expectation (budget and/or prior year).
  • Use colors, visual icons, or arrows to draw attention to accounts or variances that exceed threshold tolerances. Thresholds might be a dollar amount, a percentage, or standard deviations.
  • Consider the users of the information and the level at which they consume the information. If they manage their business using thousands of dollars, then round to the nearest thousand. Fewer digits makes it easier to identify issues, discuss them, and retain for future reference.

4. Make it flexible and comparable

When establishing the row structure, consider the overall reporting structure across the organization. Ideally, one row structure will be applicable for all versions of the statement, whether the report is run at a consolidated level, customer level, department level, or business unit level. Having that consistent look and feel will enhance user adoption and understanding of the report and foster development of the common financial language across the entity.

Accuracy on-demand

If financial reporting is to become one of the major tools for decision making, the report itself must have integrity. But integrity becomes problematic when management reports are created using Excel spreadsheets offline. Offline increases the chance of inaccurate reports due to data entry errors. Cloud systems build information integrity, since reports are generated inside the financial management system.

How we can help

Cloud systems can improve visibility across the entire organization. Non-accounting personnel will be able to access critical data in real time that will allow them to make decisions faster and with more confidence. CLA has helped hundreds of organizations choose a cloud application that works for their business. We can help you select a web-based accounting system and tailor the implementation to help ensure the reports are meaningful to you and your organization.