5 tips for financial reporting

5 tips for financial reporting

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As a general manager or a board member, you get quarterly reports from the finance department. Based on this report, you make decisions about critical investments. In retrospect, it turns out that there were errors in key numbers and your decisions were based on wrongful data. A financial report where all key numbers are correct and where all parties understand what they mean is crucial to make the right decision. To make sure that you make decisions based on reality, we have put together some tips about financial reporting. 


5 tips for financial reporting for management and the Board


  1. The report should be based on current, correct and complete information
    Use a reporting plan that ensures that the person who compiles the report is given enough time to establish that all numbers are correct and all data is complete. There should also be enough time to analyze and comment on deviations from the previous year or budget.
  2. Use relevant key figuresDetermine which key figures are relevant for your business's position, result and development, and track those key figures over time. It's important that those who receive the report, understand what the key figures imply. Some examples of appropriate key figures are solvency, liquidity, gross and net margin and revenue.
  3. All decision-makers must get the same information before making a decision
    If there's a group that together decides on important steps, it's important to send the report to everyone at the same time. Do it ahead of time so they all have enough time to analyse the report. That way, meetings become more productive as they can spend time on discussing the report and making decisions, instead of reading and understanding the report. 
  4. Use the same reporting format over time
    Most people don't want to spend too much time trying to understand how the financial report is compiled but rather analyse its contents. Try to agree upon a format that's easy to understand and simple to compile and stick with that format for as long as possible.
  5. Most important information first
    As a financial report contains a lot of data, the most important information should be listed on the very first page. If you have access to a digital reporting tool, a dashboard with the most important information on one page is beneficial. In most modern reporting tools (for example, Azets Report), you can get a more detailed view of the numbers in a so-called drill down. Details, analyses and suggestions should be presented in separate appendices. 


The responsibility of the Board of Directors

Remember that the Board of Directors is responsible for the business's organisation and management. If the business is about to go into insolvency, the Board must set up a control balance sheet for liquidation purposes as soon as the board members are aware of it. That's why all board members must get the correct and up-to-date information to make correct decisions and take other necessary measures.


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