High quality financial information is the key to successfully managing every company. Financial reporting provides you with exactly this information, which is crucial in order to be able to get a clear picture of the company’s situation and whether it is developing according to the goals of the management. However, it is not sufficient to simply obtain this financial information; the data on which the report is based must also be complete, i.e., free of errors. Otherwise, the data must be insignificant. In addition, report information must be relevant, timely, adaptable, scalable and easily identifiable to enable quick decision making.
What is reporting?
Reporting is the process of creating a report on the most important activities or internal processes of the company. This information can be data in the form of tables, KPIs or even graphs. The main goal of reporting is to provide a quick overview of the company's situation in order to optimise decision making and be able to make short, medium and long-term forecasts. The reports are usually prepared once a month. This provides you with a monthly overview, allowing you to compare data more easily and monitor your budget more closely.
Our 9 important tips to optimise reporting
To optimise the reporting of your company, you need to take 9 important aspects into account:
1. Up-to-date and error-free accounting
The accounting documents and management information supporting the reporting should be free of errors or otherwise insignificant. The accounting standard should reflect a realistic picture of the company and provide financial reports that facilitate decision making. In addition, the accounting records must always be up to date to allow a timely financial reporting. In other words: The reports need to be complete, relevant and up to date.
2. Automation of the accounting tasks
Automating routine accounting tasks is the key to streamlining processes, especially in large companies. Therefore, all companies above a certain size have accounting software that allows certain postings to be made automatically, such as bank transactions or the digitisation and automatic posting of supplier invoices.
3. Easy export of data
In some cases, it is necessary to export the required information first in order to obtain certain reports. Many CFOs and accountants use Excel or Power BI, to generate certain reports or create dashboards or annual budgets. However, with good financial software, key reports for the management can be generated directly, so fewer and fewer CFOs need to rely on external software such as Excel for reporting.
4. Full integration with management software
Converting data outside of accounting software is prone to errors and can slow down reporting. Therefore, financial reports should be directly integrated into the ERP or accounting software being used.
5. Continuous improvement of the reporting
Reporting must constantly adapt to the new information needs of the management as well as to innovations. In addition to the data collected and published as part of the regular annual financial statements, the data must be adapted according to the specific needs of the management reporting. Furthermore, possible innovations must be taken into account, such as Open Banking, which facilitates the integration of banking information and transactions into accounting software.
6. Provision of information both at the consolidated and individual financial statement level
Some companies prepare their financial statements in a consolidated manner. Good accounting software should therefore allow reports to be produced at both the consolidated financial statement level and the individual financial statement level for each company. Consolidation should not only be possible between companies, but also between different departments and segments of the company.
In order to facilitate analysis of the report information and enable quick decision making, the data should be simplified and grouped into indicators or KPIs and presented in a graphical or tabular format.
The information must be flexibly adaptable to the needs of the different recipients to whom it is directed. For example, a department head may need very detailed information on their department, while the general management may need an overview of certain indicators summarised in the form of a dashboard.
The reporting should be scalable so that the details of the data from which the indicators were derived can also be viewed from the level of specific indicators or KPIs.
In addition to good software, sufficient human resources must be available at all levels, as all parties involved in the process are important to ensure reliable and relevant reporting. On the one hand, accountants need to ensure the integrity of accounting information, and on the other hand, managers need to utilise the full potential of the reporting in order to make the best decisions for the company. And even though all of these points are important, they can be summed up in one: It is crucial to have good software that delivers high-quality reports that meet the needs of all the different decision-makers in the company.
Modern management reporting is demanding and can be a challenge. You can find out here which mistakes you should avoid and how to get on top of your figures.