Financial Reports: Useful or Useless?
Finance & accounting departments are ultimately about reporting. If you are a public company, there is the required reporting to the SEC and the shareholders. And regardless of whether you are public or private, there are many other external reports that allow the business to meet its obligations to external stakeholders like banks. But the focus of this post is on the internal reporting within every company. This is the reporting that is hopefully adding value and helping to provide direction as the business drives towards its goals and objectives. Unfortunately, all reports are not created equal and many fall far short of the value they were intended to create.
The problem with reports that don’t live up to their expectations is they are time wasters on two fronts — for finance & accounting who prepare the reports and for everyone else trying to decipher what information in the report is important (if any). When this happens, people begin to question the value of not just the reports but of the finance & accounting group as a whole. As financial professionals, we are expected to provide information that is valuable to decision-making; clear, concise & accurate in its presentation; and timely to the needs of the business.
Equally important is reviewing reports to see if gains in efficiency can be made in preparing them. Look for reports that contain the same information and see if they can be consolidated. Determine if detail is really necessary or if the report users just want the summary. Also, see how often a report is really needed. If the report users only look at the information once a month before a scheduled meeting, why are you busting a gut getting it out weekly? Ensuring that reporting is a value-added exercise requires good communications between finance and the rest of the business.
Understanding their needs and balancing it with what we can do given the resources we have can be a challenge. But if the end result is better reporting leading to better decision-making, we’ve done our job well.