The finance team possesses powerful and invaluable resources for making critical decisions such as resource allocation and risk management. This resource, known as performance reporting, provides the team with key performance indicators and metrics.
While the accounts team is responsible for ensuring financial accuracy and compliance, the CXOs are tasked with forecasting and making strategic decisions. Performance reporting provides them with reliable data, such as key performance indicators and metrics, that help guide their decision-making processes. This information is crucial for departments to develop forecasts and revenue projections and identify potential roadblocks.
By utilizing performance reporting, leaders can keep their company on track and ensure that they are making informed decisions based on reliable data. It helps them identify areas needing improvement, make data-driven decisions, and adjust their strategies accordingly. Ultimately, performance reporting is critical to a company's success by providing the necessary data to make informed decisions and stay ahead of the competition.
Frictionless Communications – The best form of performance reporting communicates the expected information and format to all teams, creating a checklist of meeting expectations. Since decisions are based on this data, teams experience minimal friction. Leaders can express their expectations to their teams more effectively, resulting in a smoother communication process.
Competitive Analysis- With the help of performance reports, companies can benchmark themselves against their competitors. These reports provide insights into areas where competitors outperform them, enabling them to close the gaps and improve their performance.
Investor Appeal- Performance reports simplify and standardize business metrics, making it easier for investors to judge a company's position in the market. Reports can provide information on how the company compares to its competitors, its financial health, and other key factors that drive investment decisions. Investors are more likely to invest in the company when presented with a comprehensive and accurate performance report.
Historical data- Performance reporting involves analyzing past data, including previous cash cycles, to determine if a particular process is meeting or falling short of expectations.
Resource accounting – As these reports identify the usage of resources, they help the management decide if the resources can be utilised even more efficiently. If management has given any new budget, they can also check how the budgeting enhances the process.
Risk- Performance reporting also identifies potential risks and helps mitigate them. As the management says, "what can be measured can be achieved," and performance reporting allows for measuring and mitigating risks.
These are the main components of performance reporting visible in a company's reporting process.
Status – These are reports that measure and help understand the status of a said process. It helps keep the process on track and prepare for any hindrances. Also, they give a 360-degree view to all stakeholders interested in any developments.
Status reporting facilitates effective communication among stakeholders by giving them access to the project's progress status, allowing them to determine if the timelines can be met per expectations. In addition to status updates, critical information, such as milestones achieved, can be conveyed through status reports.
Progress – Progress reports measure and compare progress across various timelines. They are continuously updated to reflect the actual status of the project. Typically, progress is compared to previous years' data to gauge the pace of progress. For instance, management may compare how much a specific project has spent at this stage over the past three years.
Budgeted vs actual – Comparing budgeted and actual expenditures is crucial for FP&A teams. Without a well-defined process, this comparison becomes increasingly complex as the organization grows, making it necessary for FP&A teams to scrutinize the actuals versus budgets more rigorously.
By implementing proper systems, teams can make informed decisions based on accurate data rather than estimates.
Ops reporting- Just relying on data to know status might not be an effective way to understand your business. Adding KPIs gives more meaning to the data that is being used. Having an operations performance can enhance the team to allocate resources as and when to required teams rightly. And since these KPIs are usually mostly related to day-to-day activities, it helps teams access valuable resources in time.
Consolidation Reports – All the consolidation reports like Balance sheets, Cash flow statements, and P&L statements are essential for FP&A teams to get a health report of the organisation. A team equipped with these reports can firstly measure the health, compare with competitors, and understand where and how the competitors do better. And since these reports include data from all the sister entities, the organisation processes are standardized and streamlined.
All things said the reports make sense only when it is designed properly. Some things to consider for your performance reports to make sense are
Performance reporting provides consistent and reliable data for leaders to make informed decisions and understand their competition. It includes past data, resource accounting, and risk assessment. Properly designed performance reports can help organizations beat their competition, streamline processes, and minimize errors by automating reports. In summary, a well-designed performance reporting process will lead to reliable data and error-free reporting
Performance Reporting helps for organisations to have:
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