Any report should be meaningful to those reading it. Part of managing a business is being able to gain insight into your business from the reports you receive.
“Start with Why” – Simon Sinek
A meaningful report has to tell you why, and the more the report can explain the why the better. It is part of an accountant’s role to help explain the “why” that sits behind the numbers they produce.
Here are some points on writing reports that explain the why.
1. The numbers need to reflect the business. Accounting principles and standards are great, but their application needs to be appropriate. If the numbers reported do not reflect what is happening in the business, the base you are starting from is wrong.
2. Use non-financial indicators. Identifying and tracking key metrics for the business that are not financial is as important as the financial numbers. They can help frame the report and identify changes in activity that may not be immediately shown in the financial results.
3. Talk to people. You need to understand the business, and the only way to do that is to talk to people. Get help in interpreting the numbers. Quite often that will show you what needs correcting in the numbers before you can report on them.
4. Drop meaningless statements. Harder than it sounds. Writing a report that says
“sales are lower than last month, but costs are controlled”
doesn’t actually provide any meaningful information for someone reading it. Why are sales lower? Why are costs controlled, and why was that different to other months?
5. Drop meaningless data. Reports can have extra pages of data included to anticipate the readers’ needs, or that are just available. Data that does not explain the why distracts from the core message in the report. Leave out data that is not critical to the integrity of the report and doesn’t help explain the why.
6. Ask for help. When you are deep in the analysis it can become hard to see the wood for the trees. At these times it is good to be able to bounce your ideas off someone. They are more likely to point out anything that isn’t clear in the report. Or better still, find someone who can write the report for you.
7. Consider your audience. A report written for a CEO will be different to one for a Board. This would be different again for one written for Investors. It is important to consider what the audience values and providing the why they are looking for.
By following these steps, you will move towards more meaningful reporting.
Justin Hogg is an Accountant and CFO for Businesses, Founders and Entrepreneurs. He manages the numbers so that you don’t have to. He offers an initial complimentary 30 minutes session to see if he can help you to save business costs and reduce risk.
To arrange an initial, complimentary discussion, email me email@example.com or call 0414 896 696.