Managers, directors and business owners are responsible for reporting their company’s performance to shareholders. For that reason, it is important that you know what management reporting is and how to do it right.
Sean Farnell, Partner at Burgis & Bullock, discusses the best practice for creating management reports in this post.
We will cover the basics of financial reporting with a focus on management reports. It explains why they’re necessary, who they’re made for, what goes into them and some things you should be aware of when creating one yourself.
Management reports are essential for growing a successful business and this blog will help you to create the perfect report.
What is a management report?
Management reporting is vital to understanding what is going on in your business right at that moment, assessing what will happen tomorrow and ensuring you are measuring the right indicators to make that happen.
This isn’t historical year-end accounting, it’s much more of a forward looking than backward looking process. Management reporting is a process of providing your company’s managers and executives with the information they need to make good decisions.
These reports should be generated regularly in some cases daily, or weekly but for many smaller businesses they should be compiled monthly – at the very least quarterly.
Management reports can provide insight into how well the company is performing in relation to its goals, which helps determine if any changes need to be made. They can also help identify areas for improvement through data analysis and comparisons against industry benchmarks.
They are internal documents and should be used to drive the business and strategic decision-making.
What are the different types of management reports?
Management reports can be internal reports on any aspect of the business. It might be a report on sales performance, HR and People (performance, satisfaction, and culture), and the accounting ones will be cash flow, asset reports and profit and loss, there is no single type of management report.
There are many diverse types of management reports; while some focus solely on financial performance, others may include non-financial metrics like customer satisfaction scores or employee engagement rates.
If you are working exclusively in, for example, telesales, then you are going to want a management report that looks at the number of calls made, the number of decision-makers spoken to, or the number of follow-up calls made. But this report wouldn’t necessarily be for the CEO, instead it would be to measure performance against goals for the specific telesales team.
Everybody in the company should be aware of the management reports. Obviously, there is confidential information in it that should be redacted, but at the very least you should share the elements of reports relevant to each specific team.
What information should you include and how do you ensure it is accurate?
There can be a temptation to include too much information in a management report.
It should be short, succinct, and easy to read. You can of course dig deeper as a separate exercise, but this shouldn’t necessarily be included in the management report.
There can be a temptation to report and record things that aren’t necessarily business drivers.
An example of this could be something as simple as reporting on the different types of income in a business. While that is useful and important, what’s more important could be to monitor the engagement to blog posts, click through rates to a website, referrals received and other sources of sales.
Make sure your information is accurate and up to date
It’s vital to report the right information to ensure you make the right decisions. Unless you know what is happening at that moment, how can you make the right decisions?
It’s all about having knowledge of the systems and processes that go into producing data. The best practice for data is to ensure it is tied up, balanced, and reconciled to third party information where possible. This should be done on a regular basis, daily if possible.
There is no point looking at a report that is six months out-of-date, because the results of those actions have already happened.
Good, dynamic businesses will have a business intelligence dashboard that updates in real time.
What are the best practices for creating a management report?
Keep it simple. Simpler the better.
Report on what you know and understand, but make sure you get input from other areas of the business. It’s important that all parts of the business are involved in the collation of management information.
If you’re using technology, then something like Microsoft Business Intelligence is fantastic. You can design and develop your reporting template and all the data will feed directly into that.
Use colour and charts
Spreadsheets kill. Use images and tables when appropriate – this will help break up text and make it easier to read quickly.
Don’t fall into the mistake of making it look pretty if you can’t understand the information behind it. Colours are always good, and charts are great, but you do need some figures in there to back up the design.
No jargon and key information first
Don’t use jargon in your management reports, make it readable and keep it simple – I’m a firm believer in that.
In any profession there is a lot of jargon and so many acronyms that get thrown around. It’s fine if you are going to add a glossary, but a management report shouldn’t need it.
Your management report should stand on its own two feet and more than one side of paper is too long.
I don’t believe that a good management report needs an executive summary at the start. A good management report should be the summary – it shouldn’t be that long.
If you need to go into the data in more depth do that in a separate document to your management report.
How we can help?
My team do a lot of management reporting for SME businesses. These tend to be initially a financial slant. As we work closer with clients we develop as a Virtual Finance Director with them, with forward-looking Key Performance Indicators (KPIs) around sales, operations, and people.
Burgis & Bullock creates a tailored one-page plan for clients that covers the key aspects for their management reports. This is split between forward-looking KPIs and backward-looking such as profit/loss.
Over a period of time, we can impact forward-looking KPIs which should flow through to impacts on the profit/loss reports.
Find out more about our management reports and performance analysis reporting here: https://www.burgisbullock.com/services/enhanced-management/performance-analysis-reporting/