Understanding your firm’s financial health is essential for success as a business owner or financial manager. The correct financial foresight can make all the difference in your business.
Data alone, however, is not sufficient. If you want your monthly financial reporting package to have an impact, you need to make sure it’s personalized to your audience and includes insights that can’t be gleaned from the numbers alone.
Have a look at the best financial reporting practices that help you optimize your monthly financial reporting package, making it both informative and valuable for your target audience.
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Get to Know Your Audience
Understand who will be reading the report
Take a good time researching your audience and their perspectives. The runway period you take to know your audience will make building your financial reporting package easier.
Find out what they value most and focus on that
Who are the people who have a vested interest in the outcome of the situation? Is there anything else they should know before making a final choice? Are they internal stakeholders like executives and department heads or external ones like investors and lenders?
Tailor your reporting package to their needs
Understanding your audience will help you optimize your reporting package to the client’s needs. For example, if your audience is primarily investors, you may want to focus on key performance indicators (KPIs) such as revenue growth, profit margins, and return on investment.
On the other hand, if your audience is internal stakeholders, you may want to provide more detailed information on operational metrics such as sales by product line or departmental expenses.
Create a custom executive summary
If you are going to put in the work to produce an original executive summary, then you owe it to your audience to present them with the information that is the most relevant and beneficial to them as you possibly can. The following are some suggestions that can assist you in writing an outstanding executive summary:
Keep it concise
Keep your summary short and sweet by zeroing in on the most crucial KPIs and findings.
Keep it simple
Refrain from assuming your readers will be familiar with the same technical or industry you use.
Use clear language
Ensure your summary is written in clear, simple language so that everyone reading it can grasp the key points.
Emphasize the most critical metrics
Key Performance Indicators (KPIs) measure your business’s success and help you make crucial decisions.
Provide context
While it’s essential to zero in on the metrics that matter most, explaining why those particular metrics matter is just as crucial. Explain the metrics’ significance and how they fit into your overarching business plan.
Showcase your achievements
Remember to highlight any significant achievements or milestones you reached during the reporting period.
As long as you stick to these guidelines, you should be able to produce an executive summary that is truly useful to your readers and aids them in making educated decisions about your business.
Offer tailored, useful comparisons
Including insightful comparisons in your monthly accounting reports can be a powerful approach to adding value. Using comparisons, you may put your financial data and key performance indicators in context for your audience.
Think about comparing your company’s sales growth to that of others in your field or to the same period last year. Consider contrasting your profit margins with similar businesses or your past results.
If your company’s revenue growth has lagged behind the industry average, for instance, you’ll want to identify the causes and describe your strategy for improving performance.
Make reports (visually) stand out
Making your monthly financial reports aesthetically beautiful and straightforward to interpret is crucial.
Using proper formatting and visuals can make for much more interesting reports. This involves using headings, bullet points, and white space to break up huge blocks of information and make the report more readable.
Take your reporting even further
You must go the extra mile in your monthly financial reporting to deliver genuinely meaningful insights. This may involve elaborating on the data, pointing out patterns and trends, and suggesting the next steps.
In conclusion
For a report to be useful to its readers, it must be tailored to their needs and provide insightful assessments. The presentation should be interesting and easy to understand.
By instituting these best practices and creating a monthly financial reporting package, you may enhance your capacity to manage the finances of your firm and make educated choices that lead to growth and success.
