The importance of business reporting starts from day one, and changes throughout the business lifecycle.
You need to understand the business's available historical data to enable you to budget, forecast, and plan for the future. Reporting is essential to monitor business performance over any period of time. It enables you to make better business decisions, project future results and drive improvements.
How often should businesses be reporting?
All businesses need to prepare annual accounts for year-end purposes, but these are prepared in a standard format, not giving you bespoke information that will enable you to drive the business forwards.
They are usually prepared months after the year's end, by which time you are well into the following year and the information is already out of date.
How are management accounts different?
Unlike annual accounts, management accounts refer to financial reports and information that are prepared specifically for internal use by management to support decision-making and to monitor the performance of a business or organisation.
What Business Reporting needs to have
Effective business reporting is like having a clear window into your company's health. With this transparency, you can build trust with investors and lenders, make sound decisions based on real data, identify potential issues and opportunities early on, and ultimately use your resources more effectively to fuel your company's growth.
Keep the information fresh and frequent
Information needs to be received regularly and shortly after the period being reported on. Any report received is already containing historical data, but how fast you produce these reports will affect how quickly you can make changes and impact future periods.
Keep the information relevant
The information presented should be directly relevant to the specific needs and interests of the intended audience. This means tailoring reports for different stakeholders, such as focusing on financial performance for investors and operational details for department managers.
Accuracy is essential
The data and information included in the report must be reliable and trustworthy. This requires meticulous data collection, verification, and adherence to established accounting standards.
Reports must cater to business needs
For reports to be useful, they need to cater to the business needs. This should include financial and non-financial Key Performance Indicators (KPIs) as well as looking at trends in the data.
Trends can help you forward plan resources and highlight potential issues that may arise. Reporting can also highlight where the most and least profitable services, industries and/or clients are, so more informed decisions can be made moving forwards.
The management information can then be used to project future periods and look at the financial impact of potential opportunities and changes, having a direct financial benefit to the business.
Best Practices for Effective Business Reporting
Use established accounting frameworks and reporting standards
Consistency and accuracy are paramount. Following established frameworks like Generally Accepted Accounting Principles (GAAP) ensures your reports are comparable across periods and adhere to industry best practices. This allows stakeholders to interpret your financial health with confidence.
Integrate business reporting with overall business strategy and objectives
Business reporting shouldn't exist in a silo. Align reports with your overall business goals and strategy. This means highlighting metrics that directly impact strategic objectives. For example, if a key objective is market expansion, reports should showcase sales growth in new territories.
Leverage technology to automate data collection and report generation
Manual data gathering and report creation can be time-consuming and error-prone. Utilise technology to streamline the process. Business intelligence tools can automate data collection from various sources, minimizing human error and saving valuable time. These tools can also generate reports with pre-defined templates and visualizations, ensuring consistency and efficiency.
Effectively communicate reports to stakeholders with clear explanations and visualisations
Don't just present a data dump. Clearly explain the findings within the report, highlighting key insights and trends. Utilise visuals like charts and graphs to enhance understanding, especially for complex data sets. Consider including a concise narrative summary that interprets the data and its implications for the business.
How to ensure your reports are right for you
Business reporting must be accurate, timely, and insightful. They must track KPI’s and trends that actually help you achieve your strategic goals and most importantly they must be easy to understand.
The right business reporting can transform a business for the better, and the Genus team are specialists in unlocking the full potential of your business data. If you need any help with your business reporting then contact our Genus team for a free discussion.
Alicia Williams
Alicia is Director of the Genus team at Shorts, a chartered certified accountant and Xero specialist.
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