how to make financial reports more user friendly

• Environmental Finance Center at UNC Chapel Hill

Four Keys to Creating a More User-Friendly Financial Statement

There will probably never be a time that financial statements, like Comprehensive Audited Financial Reports (CAFRs) and Annual Financial Reports (AFRs), are going to be as exciting as the New York Times latest bestseller. They are usually long documents and can be a little intimidating at first. However, a good financial statement is full of important information that can describe the financial well-being and sustainability of a utility. This blog post is a suggested guide to highlight a few important components of financial statements and why they should be included in each CAFR and AFR.

Before we get any further, we would like to offer this short disclaimer: We invite you to read this blog post as a suggested set of guidelines to follow when preparing financial statements, or when working with your auditor to let them know some items that would be helpful to include. These “keys” are only recommendations from the Environmental Finance Center (EFC), created based on our experience of best practices from working with a wide variety of financial statements. If you are a governmental water system, you will want to ensure your auditor follows the Generally Accepted Accounting Principles (GAAP) – maintained by the General Accounting Standards Board (GASB) – as well as any additional regulations that are necessary in your state. If you are a non-governmental water system, you or your auditor should be aware of the guidelines from the Financial Accounting Standards Board . Also, see previous EFC blog posts on helpful hints for reading annual financial statements , and for how to use financial key performance indicators to look for warning signs of unhealthy financial trends in your organization.

Now let’s look at four keys for an annual financial statement that will make evaluating the financial health of your utility a bit more user-friendly.

1. Separate Funds for Each Utility

If your organization owns more than one utility, it can be very helpful for each utility to have a separate enterprise fund or section in the financial statement (or at least be broken out into separate columns of figures). When you combine multiple utilities, such as gas and water, into one set of figures in the financial statement, it might seem easier at first. But ultimately this only inhibits seeing the financial health of each utility separately and clearly.

For example, if water and gas are combined into one, that may mask the fact that the water business is doing fine while the natural gas business is losing money and needs to be restructured (e.g. reduce costs, raise rates, or both). Each utility benefits from having its own separate, complete set of figures to ensure each utility operates with relative autonomy and financial sustainability. (In some states this may be required by law, in fact.) Indeed, for local government systems, it is a best practice under GAAP for enterprise funds to be financially self-sustaining (though there are some legitimate exceptions to this principle).

2. Break Out Depreciation Expenses

Depreciation is a method of allocating the cost of a tangible asset (such as a treatment plant) “wearing out” over its useful life. While depreciation expense is an accounting procedure – you’re not actually handing anyone a check for a “depreciation bill” –including deprecation as an operating expense on the Statement of Revenues, Expenses and Changes in Net Position can be a step in the right direction to ensure there will be enough funds to pay for updates and repairs to your assets in the long run.

Even though depreciation is just an estimate, it is important because it can help calculate the Operating Ratio , to see if a utility’s Operating Revenue (coming largely from their rates) is high enough to cover the cost of operations and capital. (Of course, equipment tends to cost more to replace now than it did when you first bought it, so the cost of replacement may need another 20% or more above and beyond the fully depreciated value.) By breaking depreciation out, a utility can show ability to cover day-to-day operations and maintenance expenditures. So, break it out!

3. Unrestricted Cash and Cash Equivalents

If there is ever an emergency expense, knowing how much of a utility’s cash is easily accessible is key! It is important to include and separate Unrestricted Cash and Cash Equivalents from other kinds of Current Assets, such as restricted cash funds, prepaids, and inventories on the Statement of Net Position. Restricted cash can refer to certain funds that are set aside and unavailable for immediate use, such as for payments to bondholders under legally binding bond covenants. (Certificates of Deposit, while not restricted funds per se, may not be able to be immediately liquidated for their full amount without paying a penalty for early termination – so having a separate line item for them too can be useful). Unrestricted Cash and Cash Equivalents typically refers to money that is immediately available for investing or spending. Unrestricted cash, together with annual operating expenses, can then be used to calculate how long a utility can run with no new revenue in case of emergency – also known as Days of Cash on Hand .

4. Long Term Capital Debt

Some utilities take on debt to help pay for expanding/ upgrading their system. These debts (related to loans, warrants, notes, or bond issuances) aren’t necessarily bad – in fact, they may be a sign of the useful growth of the utility. However, the principal and interest payments made on these debts should be clearly and separately stated on the Statement of Cash Flows – presumably under the “Cash Flows from Capital and Related Financing Activities” section. And if your auditor chooses to list the interest payments in a separate section of the CAFR/AFR, it would be helpful to restate the interest payments here, together with the principal payments, for clarity. These debt payments can be used to calculate, among other financial key performance indicators, the Debt Service Coverage Ratio – which is used to measure ability to pay for debt service and day-to-day expenditures using operating revenues.

To conclude, each of these four keys is important to help calculate the key performance indicators of the financial health and success of the utility. Doing so should help – for financial experts and non-experts alike – to understand these four concepts, make the audits a bit more user-friendly, and to support the utility in being more efficient and sustainable.

Hope this helps and happy auditing!

Alison Andrews is a student intern at the EFC and is pursuing a dual degree in Economics and Public Policy at The University of North Carolina at Chapel Hill. The contents of all posts authored by students are solely the responsibility of the authors. Statements made and opinions expressed are strictly those of the authors and  not  the Environmental Finance Center or The University of North Carolina at Chapel Hill.

Title image source: http://blog.sercle.com/wordpress/wp-content/uploads/2015/11/finance-concept_z17OEuDO.jpg 

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How to Make Financials More Meaningful

Category: Reporting

For many businesses, financial reports are a formality, but how often do key decision makers challenge the data to find out more about what it really means?

by Phil Wright | Director, Menzies LLP – Guest Contributor

Financial directors within small and medium-sized businesses often say that profit and loss reports prepared for the monthly Board meeting get little or no reaction. In some instances, this could be because the data is not being interpreted fully or accurately enough, or else it lacks the layer of interpretation needed to make it meaningful.

When smaller businesses grow, business leaders may find that the financial data being reported back by the in-house finance team is no longer as useful as it once was. For example, it may be too historical or focused in an area that is no longer relevant or necessary. In other cases, the data sets may have been added to over time, which has caused monthly management reports to become too long and difficult to navigate.

If a financial report has grown to 25 pages or more and is at best skim read, or at worst, ignored completely, it would probably benefit from a review. In general, reports tend to get more favourable feedback if they are much shorter, more relevant and focused on the future. How does the past impact the future? How can we use this information to spark positive change?

…reports tend to get more favourable feedback if they are much shorter, more relevant and focused on the future.

As business advisers, our teams are often asked for advice about how to improve financial reports and make them more user-friendly. We usually recommend that a management pack of information is prepared and circulated in advance of board meetings; making sure there is the right amount of analysis to ensure the data is understood. This should be accompanied by a ‘one pager’ summarising key data in an easy-to-digest format.

As part of its monthly reporting, the business should establish Key Performance Indicators (KPIs) and keep them under review as the business grows. Sales and cash flow forecasts should also be prepared to provide a realistic picture of where the business is heading. The management pack should share facts about the performance of the business against these pre-agreed KPIs – for example, are sales figures higher or lower than targeted? How might this affect the forecast for next month, the current year and the year after?

…the business should establish Key Performance Indicators (KPIs) and keep them under review as the business grows.

Keeping the data as up-to-date as possible is also important. Board directors are bound to lose interest if the only numbers they are being shown each month relate to the previous month’s performance. If this is happening, financial teams should try to find out why the information is late. For example, if the business is waiting until the 21 st for all supplier invoices to come in and be entered meaningful financial reports arrive much later. Introducing a new rule whereby all supplier invoices must be in by the 7 th of the month, to get paid by the end of the month, could make all the difference and improve your internal reporting timetable. Do you really need to wait that long?

Reporting financial data can be more complex in businesses that operate on a project basis, such as those in the construction industry. Some projects may last just a few months, whereas others might last a year or more, and it is important to account for them on a project-by-project basis. As well as keeping track of payments made and invoices issued, the business will want to know whether each individual piece of work is profitable or not. To calculate this accurately, the financial team will need to stay in touch with operations and make sure they know what stage the project has reached and whether it is likely to complete on time and on budget, and if not, due provision is made.

Depending on the number of projects underway at any one time, it may be important for the financial team to understand the point at which each is expected to turn cash positive. This could help to reassure decision makers that the cash position of the business is secure, even if the project appears to be unprofitable in the early stages. Conversely, a profitable contract still may put a huge cash flow strain on a business if early expenditure is significant, before recovering from your customer. If this occurred on multiple contracts, at the same time, clearly the impact is compounded.

… forecast modelling should be introduced to provide a view of how strategic decisions could impact the performance of the business over time.

To ensure financial data is relevant and forward-looking, forecast modelling should be introduced to provide a view of how strategic decisions could impact the performance of the business over time. For example, the Board may wish to know what would happen if the business increases or reduces prices by 1%, or if it recruits a new senior manager to head up an expanding sales function, or ventures to new territories. Demonstrating the cash impact of changes or differing scenarios should keep the whole management team engaged. This type of cash modelling can help to make financial data more meaningful and integral to the running of the business

——————————-

Phil Wright is a Director with Menzies LLPMenzies LLP, Chartered Accountants and business advisers on the South Coast of England. www.menzies.co.uk/

This article was first published in the Financial Director https://www.financialdirector.co.uk/

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How Can You Improve Your Financial Reporting Process?

Improve your overall workflow

Improving your workflows will help you to improve your financial reporting process. Ensure that each team member has a clear idea of their responsibilities and the time frames in which they need to carry them out. 

It can often help to write down or visualise your workflow for anyone in the team to look back on when needed. Having a defined, structured workflow in place helps to avoid mix ups and identifies areas for improvement.

How to improve your financial reporting process 

Financial data is key for in-depth insights into your business performance and enables you to pull together financial reports that can help forecast and make better-informed business decisions. However, as companies aggregate more data, financial reporting can quickly become headache-inducing if the right systems aren’t in place. 

Some of the most common challenges companies face with financial reporting include:

• Verifying the financial data collected
• Gathering and preparing data from multiple systems
• Affording the technology and resources required
• Handling new regulations or external audits
• We’ve pulled together some key ways to improve your financial reporting process:

Standardise information collection 

Consistency is key when it comes to accurate data and simplifying the process. Start by creating templates that enable different sets of financial data to be stored in a consistent structure. The collection process should remain the same and so the templates should work for all forms of data. 

Keep information and data organised

Organisation is what safeguards against inaccurate data or struggling to find the information you need. You can organise your data in the following ways:

• Build datasets that can be managed through tagging, filters and other metadata to make it easy to navigate what you need.
• Develop financial report templates that can be used across your business.
• Preserve data integrity by applying permissions to limit who can view and edit sensitive documents.
• Consolidated financial statements include the income statement, cash flow statement and balance sheet all in one place, making it easy to access organised data.

Automate time-consuming tasks

Using the right financial reporting software , reporting is a breeze with time-consuming tasks fully automated. For example, finance teams can benefit from the following:

• Having all financial data in one place without having to manually add to a spreadsheet that’s already bursting at the seams. 
• Data can all be automatically consolidated into various groups.
• Reports can be produced at the click of a button.

Collaborate across departments 

Working together as an organisation rather than independently not only encourages transparency, but also saves a great deal of time. Cultivating a shared financial reporting environment allows users to work simultaneously, not one at a time. Using a single shared live document eliminates the need for multiple versions and prevents any miscommunication.

Keep all final reports in one location 

Streamlining the reporting processes is so important to avoid wasted time or an overwhelming amount of data. Create one place for the financial reporting team to store information. Keep final reports for certain time periods in easy-to-find folders so that teams can easily go and find them when they need source information. 

How can you ensure accuracy in financial reporting? 

To produce accurate financial reports, the initial data collected needs to be accurate from the very beginning. The data entry stages are vitally important and if the information is incorrect, it’ll produce inaccurate financial reports. Automated data entry and regular cross-checking can help promote accurate financial data.

Some other methods that support accurate financial reporting include:

• Account reconciliation — comparing external records such as invoices, bank statements and credit card statements with internal accounting records is a great way to ensure accuracy. This should be done on a regular basis. 
• Scanning for errors — regularly check balance sheets for obvious errors and the monthly cost of goods sold as sales vary each month. 
• Supervising — even if you’ve hired a professional financial team, regularly supervising their work and asking for updates will increase their responsibility and the importance they place on their role.
• Regular auditing — regularly reviewing accounts and financial statements with your team means that no errors slide by without being corrected. 

Financial reporting doesn’t need to be an arduous process that is a consistent pain point for your business. Following our tips above will help you greatly improve the data collection and reporting process. Financial reporting software is designed to provide you with quick, easy and accurate insights from your financial data. With an easy-to-use interface and user-friendly reports, it’s a great way to streamline the process, with everything in one place. 

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Designing & presenting effective financial reporting dashboards

Billy is an expert in the FP&A space. Before joining Cube at the seed stage, Billy found success as a tax advisor at companies like Grant Thornton LLP and Gemini.com. He holds a BA and MA in Accounting from William & Mary and splits his time between NYC and New England.

A financial dashboard is an invaluable data visualization tool that helps finance teams track and report on financial KPIs.  

It can help you identify positive (and negative) trends, track progress toward goals, and arm you with insights to make intelligent, data-driven business decisions.  

Modern financial dashboards go a step further, leveraging big data analytics to provide you with more in-depth information you can act on.  

Despite its strengths, a financial dashboard is only truly valuable when it's easy to understand. Let’s review some of the best financial dashboard examples and how to design an effective dashboard tailored to fit your needs.

Billy Russell

FP&A Strategist, Cube Software

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Why you need modern financial reporting dashboards

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A financial dashboard is a data visualization tool designed to present key financial metrics in a comprehensive and user-friendly interface, sort of like those displays Tony Stark had while flying around in his Iron Man suit. 

Unlike those, however, they’re not quite as exclusive: financial dashboards are meant to be accessible to all users, serving as a centralized platform for monitoring, analyzing, and interpreting financial information. By offering a real-time snapshot of your organization's financial performance, these dashboards enable stakeholders to quickly identify trends, monitor progress toward targets, and make well-informed decisions.

If your company is a building, financial dashboards are like windows providing transparent views into specific business areas. These might include cash flow, budget variance, or profit and loss, among others.

The beauty of a financial dashboard lies in its ability to present complex financial information in a user-friendly manner. With colorful visualizations, charts, and graphs, the dashboard transforms intimidating numbers into a captivating story, making it easier for stakeholders at all levels to understand and act upon the information presented.

Why you need modern financial reporting dashboards 

That said, it's important to note that not all financial dashboards are created equal. It's not enough for them to look pretty—you need modern financial dashboards that leverage big data analytics to provide more in-depth insights and information you can take action on.

It's also not enough to present data without providing any meaningful context. While it can certainly be helpful to see important information at a glance, it's critical for financial professionals to understand how each metric connects. 

Truly valuable financial dashboards present data in a clean and digestible manner while offering explanatory insights. They synthesize disparate financial and accounting data into one source of truth. Such dashboards are critical to your overall strategy for successful Financial Planning and Analysis (FP&A) .

Financial dashboards are a visual tool, so seeing them is the best way to get an idea of what they're all about. Read on to see some of the best financial dashboard examples (all built in Cube) and learn what each template covers.

CFO dashboard

It's no secret that the role of the CFO is changing.

Previously viewed solely as an accountant, today's CFO is a strategic partner to the CEO, acting as part of a critical dynamic duo that helps direct the company's trajectory.

To do this effectively, however, CFOs need quick access to data on just about every financial aspect of the business. Enter the CFO dashboard, which provides a comprehensive overview of financial data and performance indicators. It may include metrics such as revenue growth, net profit, working capital, free cash flow, and budget variances that CFOs can view on-the-fly.

The CFO of the past was focused on historical data. Now, when everything is in front of them, they can look forward rather than backward and make quick, well-informed strategic decisions that benefit the company's future.

Cash flow dashboard

Cash flow is one of the most important measures of financial health. Using a cash flow dashboard, your business can gain a quick view of inflows and outflows for the specific period being evaluated (usually monthly, quarterly, or annually). Remember that you can create separate cash flow dashboards for different periods for a more holistic view of your business's finances. While one trend may not be apparent over a month, it could be over a quarter.

The cash flow dashboard should include your current cash balance. It should also break down information from your cash flow statement, like cash flow from operations, cash flow from financing, and cash flow from investing activities. Imagine each type of cash flow being clearly defined with a different color — a lot more interesting to take the information in this way than scouring the cash flow statement!

Another piece of information from the cash flow statement that should be included in your dashboard is the net cash flow. Net cash flow is the difference between total cash inflows and outflows for the period.

Your cash runway should be displayed prominently in a cash flow dashboard, especially if you're operating a startup. This is the time you have before running out of liquidity, and it informs whether you need to cut expenses or have room to invest in growth.

Finally, we have the cash conversion cycle and gross profit. The cash conversion cycle looks at the length of time required to convert investments in inventory into liquidity, while gross profit shows how much revenue is left over after factoring in the cost of producing goods.

The formula to calculate the cash conversion cycle (CCC) is as follows:

CCC = days inventory outstanding + days receivable outstanding - days payable outstanding

To calculate gross profit, use this formula:

Gross profit = revenue - cost of goods sold

The information in the cash flow dashboard can be used as a basis for cash flow forecasting, a critical process that will help you plan out inflows and outflows and avoid liquidity shortfalls. 

Forecast vs. actuals dashboard

Budget variance analysis is crucial for tightening your budgets so that resources are well-spent. The first requirement for this dashboard is an accurate baseline.

Display the projected or forecasted values for each KPI or metric based on the business's planning and forecasting processes.

Present the actual performance data for each KPI or metric, reflecting the real-world results achieved. This can be displayed alongside the forecasted values for easy comparison.

Include a section highlighting the variance or difference between the forecasted values and the actual performance. This can be shown as both absolute values and percentage variances. Positive variances (when actuals exceed forecasts) can be indicated in green, while negative variances (when actuals fall short of forecasts) can be highlighted in red.

By adopting these practices, decision-makers can easily identify areas that require attention, make informed financial adjustments, and optimize resource allocation to achieve better financial outcomes.

Profit and loss (P&L) dashboard

A profit and loss dashboard provides an overview of the company's financial performance, specifically the revenue, expenses, and net profit or loss. It includes metrics such as gross profit margin, operating income, net profit margin, and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Visualizations like line charts and bullet graphs can effectively represent P&L data.

Expense detail analysis dashboard

The expense detail analysis dashboard delves into the details of expenses and helps organizations monitor and analyze their spending patterns. It may provide insights into various expense categories such as payroll, marketing, travel, utilities, etc. By visualizing expenditure data with a finance dashboard, organizations can identify cost-saving opportunities, control expenses, and optimize resource allocation.

Financial reporting dashboard

A financial reporting dashboard consolidates and presents financial data in a format suitable for reporting purposes. It usually includes key financial statements such as the balance sheet, income statement, and cash flow statement, breaking down these complex documents into visualizations that are easy to understand. The dashboard can be customized to highlight specific financial metrics or performance indicators required for reporting to stakeholders, management, or regulatory bodies.

Balance sheet dashboard

The purpose of a balance sheet dashboard is to provide a clear and concise overview of an organization's financial position at a specific point in time. It presents key information from the balance sheet, one of the three primary financial statements.

That includes current and non-current assets like cash, accounts receivable, inventory, property, plant, and equipment, as well as liabilities like accounts payable, loans, and other debts. The balance sheet dashboard also includes equity.

Metrics related to assets and liabilities, such as the working capital ratio, should also be included in the balance sheet dashboard.

CAGR dashboard

A CAGR (Compound Annual Growth Rate) dashboard displays and analyzes individual metrics' growth rates or key performance indicators (KPIs) over a specific period. 

By providing a comprehensive view of growth rates over time, a CAGR dashboard enables stakeholders to assess performance, identify growth opportunities, and make informed decisions to drive the organization's success.

For example:

With a CAGR dashboard, you can compare the growth rates of different business segments, products, or regions. This helps identify areas of success and areas that require attention. In this way, a CAGR dashboard helps you prioritize resources.

A CAGR dashboard is also important for evaluating the performance of investment portfolios, individual stocks, or assets. Finally, use a CAGR dashboard to demonstrate the time value of the money function of the underlying finance analytics platform.

Financial performance dashboard

The financial performance dashboard provides a bird's eye view of your business's financial health and operating expenses.

An obvious indicator of financial health is your liquidity, which represents your ability to meet short-term financial obligations and respond to crises. On the financial performance dashboard, liquidity is usually indicated by the working capital ratio (current assets divided by current liabilities).

Operational metrics such as sales, customer satisfaction, and employee productivity are also included in a financial performance dashboard, specifically in the context of their financial impact on the company. Don't forget to include collections metrics like accounts receivable aging, accounts payable aging, and billings.

When you can easily view operational issues, you can quickly fine-tune business processes to boost revenue and collections and free up capital. 

The financial performance dashboard also focuses on equity, specifically how it relates to other metrics. Here you'll find the debt-equity ratio and the return on equity. The debt-to-equity ratio is a financial ratio that compares a company's total debt to its total shareholders' equity. It's a measure of the company's financial leverage and indicates the proportion of debt financing relative to equity financing used in operations and investments.

The formula to calculate the debt-to-equity ratio is:

Debt-Equity Ratio = Total Debt / Shareholders' Equity

Return on equity measures a company's profitability relative to its shareholders' equity. In other words, it shows how effectively the company generates profits from the shareholders' investments.

The return on equity (ROE) formula is:

ROE = Net Income / Shareholders' Equity 

Above are some financial dashboard examples of the main templates used by professionals. But if you need something custom, you can always make your own financial dashboards in Cube. These can be as tailored as you want, including whatever information is needed to address the problems you're looking at. 

Follow these steps to design your financial dashboard:

Define the purpose and audience

First, ask what the purpose of your financial dashboard is.

For example, what are the specific financial goals and objectives you would like to achieve using the dashboard? Who is it designed for? Who in the company can surface the stepping stones to achieving those goals by looking at this dashboard? Is it executive management or finance and accounting teams? Which metrics will be relevant to them?

Based on the answers to these questions, you can choose whichever financial dashboard example above fits best. If none of them do, create your own financial dashboard.

Provide context and comparative data

Data is useless in isolation.

Add context to your primary metrics by including benchmarks, targets, or historical data for comparison. Show trends over time and highlight variations from expected values.

You should also provide explanatory text or annotations to help your target audience understand the significance of the data. In other words, don't just display numbers but help interpret them.

Choose the right visualizations

Visualization should be chosen based on the type of information being presented (line charts for trends over time, bar charts for contrasting different categories, etc.)

Ensure responsiveness and interactivity 

Design the dashboard to be responsive across different devices and screen sizes. Ensure that it can adjust to different resolutions without sacrificing usability. You'll want to add interactive elements like filters, drill-down functionality, and tooltips that allow your target audience to really explore the data.

Keep it simple and focused

A cluttered finance dashboard defeats the purpose. Highlight the metrics that are most important to decision-making with certain colors while also offering the ability to drill down.

Regularly update and maintain your dashboard 

Financial data and metrics change over time, so keeping the dashboard updated with the latest information is essential. Establish a process for regularly updating and maintaining the dashboard to ensure the accuracy and relevance of the displayed data. It doesn't need to be perfect right off the bat. Get feedback from your audience so you can continue working on it until it's as solid as possible.

Conclusion: dashboards you can depend on

When it comes to making smart decisions that drive business growth, high-quality financial data is a critical element. However, if this financial data isn't easily accessible, it can prevent you from obtaining the insights you need to mitigate any potential issues and set your business up for success.

Effective financial dashboards (like the ones described above) are a great way to ensure stakeholders at all levels can understand financial metrics, how these metrics connect, and how to act upon the information in a way that benefits your business.

Ready to get started? Cube's Dashboard Creator empowers you to see and explore your data your way. Request a free demo today to learn how Cube can help you easily access, filter, and visualize data to make better decisions, faster.

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Use Visual Aids to Enhance Financial Reporting

February 24, 2023 CPAs & Advisors

Graphs, charts, tables and other data visualizations can be inserted in your financial statement disclosures to improve transparency and draw attention to key accomplishments. As your organization prepares its year-end or quarterly financials, consider presenting some information in a more user-friendly, visual format.

Reimagine data presentation 

In business, the use of so-called “infographics” started with product marketing. By combining images with written text, these data visualizations can draw readers in and evoke emotion. They can breathe life into content that could otherwise be considered boring or dry.

Annual reports are traditionally lengthy and heavy with numbers and text. Some organizations are now using visual aids to disclose critical financial information to investors and other stakeholders. In this context, infographics help stakeholders digest complex information and retain key points.

Show, don’t just tell

Examples of formats that might be appropriate in financial reporting include:

Line graphs. These graphics can be used to show financial metrics, such as revenue and expenses over time. They can help identify trends, like seasonality and rates of growth (or decline), which can be used to interpret historical performance and project it into the future.

Bar graphs. Here, data is grouped into rectangular bars in lengths proportionate to the values they represent so data can be compared and contrasted. A company might use this type of graph to show revenue by product line or geographic region to determine what (or who) is selling the most.

Pie charts. These circular models show parts of a whole, dividing data into slices like a pizza. They might be used in financial reporting to show the composition of a company’s operating expenses to use in budgeting or cost-cutting projects.

Tables. This simple format presents key figures in a table with rows and columns. A table can be an effective way to summarize complex time-series data, for example. It can provide a quick reference for information that investors may want to refer to in the future, such as gross margin or EBITDA over the last five years.

Effective visualizations avoid “chart junk.” That is, unnecessary elements — such as excessive use of color, icons or text — that detract from the value of the data presentation. Ideally, each graphic should present one or two ideas, simply and concisely. The information also should be timely and relevant. Too many pictures can become just as overwhelming to a reader as too much text.

Other uses of visual aids

In addition to using infographics in financial statements, management may decide to create data visualizations for other financial purposes. For example, they could be given to lenders when applying for loans or to prospective buyers in M&A discussions. An infographic could also be used in-house to help the management team make strategic decisions.

Additionally, nonprofits often use infographics to create an emotional connection with donors. If effective, this outreach may encourage additional contributions for the nonprofit’s cause.

Bringing the numbers to life

By supplementing text and numeric presentations with visual elements, your organization can communicate more effectively with investors, lenders, donors and other stakeholders. Contact us to decide how visual aids can help you drive home key points and clarify complex matters.

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How to Create Regular Financial Reports in Excel

Excel is an incredibly powerful tool when it comes to managing financial data and creating reports. The program's many features make it easy to organize and analyze your data, and present your findings in a clear and professional manner. In this article, we will explore everything you need to know to successfully create regular financial reports in Excel. From setting up your template to using advanced formulas and macros, this guide will cover it all.

Table of Contents

Why Excel is the Ideal Tool for Financial Reporting

Excel is the go-to tool for financial professionals for several reasons. Firstly, its advanced features make it easy to analyze large amounts of data quickly. Secondly, it has an intuitive user interface, making it easy to use for people of all experience levels. Lastly, it is highly customizable, allowing users to create templates and reports that meet their specific needs.

Another reason why Excel is the ideal tool for financial reporting is its ability to handle complex calculations. With its built-in formulas and functions, users can easily perform calculations such as net present value, internal rate of return, and more. This saves time and reduces the risk of errors that can occur when performing calculations manually.

Furthermore, Excel allows for easy collaboration among team members. Multiple users can work on the same spreadsheet simultaneously, making it easier to share information and ensure accuracy. Additionally, Excel's compatibility with other Microsoft Office programs, such as Word and PowerPoint, makes it easy to integrate financial data into presentations and reports.

Setting Up Your Financial Report Template in Excel

Before you begin inputting your financial data, it's important to first create a template. This template will serve as the foundation for all of your financial reports going forward. When creating your template, make sure to include all the necessary fields, such as date, income, expenses, and any other relevant information.

It's also important to consider the formatting of your template. Use clear and consistent fonts, colors, and styles to make your financial reports easy to read and understand. Additionally, consider adding charts or graphs to visually represent your data. This can help highlight important trends or patterns in your finances.

How to Input and Organize Financial Data in Excel

Once you have your template set up, it's time to start inputting your data. Organizing your data correctly is essential for the success of your financial report. Make sure to input all relevant information accurately, and ensure that your data is sorted correctly.

It's also important to use consistent formatting throughout your spreadsheet. This includes using the same currency symbols, decimal places, and date formats. Consistent formatting not only makes your spreadsheet look more professional, but it also makes it easier to read and understand.

Using Formulas and Functions to Analyze Financial Data in Excel

Excel is equipped with a wide range of formulas and functions that allow you to perform complex calculations on your data. These formulas and functions can help you quickly identify trends in your data and make informed decisions about your financial future. Some of the most common formulas and functions used in financial reporting include SUM, AVERAGE, and COUNTIF.

Additionally, Excel also offers more advanced financial functions such as NPV (Net Present Value), IRR (Internal Rate of Return), and XIRR (Extended Internal Rate of Return). These functions are particularly useful for analyzing investment opportunities and determining the profitability of a project. By utilizing these functions, you can make more accurate financial projections and better understand the potential risks and rewards of your investments.

Tips for Formatting Your Financial Report for Professional Presentation

Once you have completed your financial report, it's important to present it in a professional and visually appealing way. This includes using appropriate formatting, such as charts and graphs, to clearly communicate your findings. It's also important to proofread your report thoroughly for any errors or mistakes.

Another important aspect of formatting your financial report is to ensure that it is easy to navigate. This can be achieved by including a table of contents, page numbers, and section headings. These elements will help your readers quickly find the information they need and understand the structure of your report.

Additionally, it's important to consider the audience for your financial report. If you are presenting to a group of investors, for example, you may want to include more detailed financial data and analysis. On the other hand, if you are presenting to a non-financial audience, you may need to provide more context and explanation for financial terms and concepts.

Understanding Charts and Graphs in Excel: An Overview

Charts and graphs are powerful tools that can help you visualize your data in new and interesting ways. By using charts and graphs, you can better identify trends in your data, and communicate your findings to others more effectively.

Excel offers a wide range of chart and graph types, including bar charts, line charts, pie charts, and scatter plots. Each type of chart or graph is best suited for different types of data and analysis. For example, a bar chart is useful for comparing data across different categories, while a line chart is better for showing trends over time. It's important to choose the right type of chart or graph for your data to ensure that your message is clear and easy to understand.

How to Create Custom Charts and Graphs for Your Financial Report

Excel offers a variety of chart and graph options, allowing you to create custom visuals that are tailored to your specific needs. Some of the most common chart types used in financial reporting include line charts, bar charts, and pie charts. Experiment with different chart types to find the one that best suits your needs.

When creating custom charts and graphs for your financial report, it's important to consider the audience you will be presenting to. If you are presenting to a group of investors, for example, you may want to include more detailed information and use more complex charts. On the other hand, if you are presenting to a general audience, you may want to use simpler charts and focus on presenting the information in a clear and concise manner.

Adding Visual Elements to Enhance Your Financial Report

Aside from charts and graphs, there are many other visual elements you can add to your financial report to make it more engaging and informative. For example, you can add images, icons, or other design elements that help to break up large blocks of text and draw the reader's attention to important information.

Another way to enhance your financial report is by using infographics. Infographics are a great way to present complex financial data in a visually appealing and easy-to-understand format. You can use different types of charts, diagrams, and illustrations to convey your message effectively.

In addition, you can also use color to make your financial report more visually appealing. Color can be used to highlight important information, create contrast, and make your report more engaging. However, it's important to use color sparingly and consistently throughout your report to avoid overwhelming the reader.

Using Pivot Tables for Dynamic Data Analysis in Excel

Pivot tables are another powerful tool in Excel that allow you to analyze your data in new ways. They allow you to quickly summarize and visualize large data sets using interactive tables. By using pivot tables, you can quickly analyze your data from different angles, making it easier to identify trends and patterns.

One of the key benefits of using pivot tables is that they allow you to easily group and filter your data. This means that you can quickly drill down into specific subsets of your data to gain deeper insights. For example, you could group your sales data by region, and then filter by product category to see which products are selling best in each region.

Another advantage of pivot tables is that they are highly customizable. You can easily change the layout of your table, add or remove fields, and apply different calculations to your data. This means that you can tailor your analysis to your specific needs, and create dynamic reports that can be updated with new data as it becomes available.

Automating Your Financial Reports with Macros and VBA in Excel

If you find yourself creating the same financial reports over and over again, you may want to consider automating the process using macros and VBA (Visual Basic for Applications). By automating your reports, you can save time and reduce the risk of errors. Macros and VBA allow you to automate repetitive tasks, such as data entry, formatting, and chart creation.

Additionally, automating your financial reports can also improve the accuracy and consistency of your data. With macros and VBA, you can ensure that your reports are always using the most up-to-date information and calculations. This can be especially helpful for larger datasets or complex financial models. Furthermore, by automating your reports, you can free up time to focus on more strategic tasks, such as analyzing the data and making informed business decisions.

Best Practices for Sharing and Distributing Your Financial Reports

When it comes to sharing your financial reports, it's important to consider the intended audience. Are you sharing the report internally with coworkers or externally with clients and stakeholders? Depending on the audience, you may need to adjust the format and content of your report. It's also important to ensure that your report is properly secured and protected from unauthorized access.

Common Mistakes to Avoid When Creating Financial Reports in Excel

Finally, when creating financial reports in Excel, there are several common mistakes you should be aware of and avoid. These include using too many different fonts or colors, failing to properly label charts and graphs, and neglecting to proofread your report for errors or inconsistencies.

Advanced Techniques for Complex Financial Reporting Tasks in Excel

For more complex financial reporting tasks, there are a variety of advanced techniques you can use in Excel. These include using arrays, conditional formatting, and advanced formulas such as VLOOKUP and SUMIF. By using these advanced techniques, you can create more sophisticated financial reports that provide deeper insights into your data.

Comparing Different Ways of Creating Regular Financial Reports: Pros and Cons

While Excel is certainly an incredibly powerful tool for financial reporting, there are other options available as well. For example, you may want to consider using specialized accounting software or web-based reporting tools. Each option has its pros and cons, and the best choice for your organization will depend on several factors, including your specific needs and budget.

With this comprehensive guide to creating regular financial reports in Excel, you should now have all the information you need to get started with confidence. Whether you're a seasoned finance professional or a beginner, Excel's many features make it possible for anyone to create professional-grade financial reports quickly and easily.

Related Resources

How to Create Regular Financial Reports in PowerPoint

How to Create Regular Financial Reports in Power BI

How to Create Financial Presentations for Board Meetings in Excel

How to Prepare Segment Reports in Excel

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Home > Blog > 5 Best Financial Reporting Software

5 Best Financial Reporting Software

by Lucas Fine

In the fast-paced world of finance, accurate and timely reporting is crucial for businesses to make informed decisions and stay ahead of the competition. Financial reporting plays a big part in that as numbers and trends need to be reported to management quickly and accurately. But with an overwhelming number of financial reporting software options available, choosing the right one can be a daunting task. 

In this blog post, we will dive into the world of financial reporting software and explore some of the top solutions that empower organizations to transform raw data into actionable insights. 

Table of Contents

What is financial reporting software?

Financial reporting software refers to specialized tools and systems that enable businesses to efficiently gather, process, analyze, and present financial data in a structured and meaningful manner.

It automates the process of generating financial reports, such as income statements, balance sheets , cash flow statements , and more. Financial reporting tools provide organizations with accurate and up-to-date information in order to evaluate their financial performance, make informed decisions, comply with regulatory requirements, and communicate financial information to stakeholders.

A good financial reporting software will also be a good financial close software , a good budgeting software , financial consolidation software , and other features depending on what your company’s needs are.

Benefits of financial reporting software

The biggest benefit of financial reporting software is automation. This comes in a few categories:

• Automated data consolidation from different sources.
• Automated reports and dashboards.
• Automated collaboration and audit trail that allows you to control who sees and edits what.

Additional benefits of financial reporting software include:

• Time saving.
• More time for insights and analysis.
• More secure and less error prone than manual reports.
• Real time updates and most recent data allows for smarter decision making.

Different types of financial reporting software

Financial reporting software comes in many different sizes, prices, and complexity. Some software solutions are free and simple, while other reporting tools are just a small part of complex software that automates the entire financial planning process. Financial reporting software can cover any of these categories: 

• Accounting software – Many accounting software solutions provide built-in financial reporting features and are important for monthly and yearly reports to the CFO and management. 
• ERP Systems – ERP systems integrate various business functions, including finance and accounting, and usually include financial reporting capabilities with more advanced analysis and drill down reporting functions. 
• BI tools – BI tools offer advanced analytics and reporting features, allowing users to create customized financial reports with interactive dashboards. Many include advanced analysis and drill down reporting functions. 
• FP&A Software – FP&A software focuses on financial planning, budgeting, and forecasting, to go along with financial reporting. FP&A software is a complete tool that automates many of the manual processes in the finance department. Many FP&A tools come with advanced reporting capabilities that include dashboards and real time updates for the best and easiest reporting.  
• Tax Software – Tax reporting software helps organizations comply with tax regulations through integration of other tax compliance software and updated laws. Tax software also automates the preparation and submission of tax reports, saving the finance team a lot of time on manual work. 

In this blog we will cover a variety of solutions that can cater to many different sizes of finance teams and budgets. 

Best financial reporting software

Oracle netsuite.

Oracle NetSuite’s financial reporting software is a cloud-based solution that helps businesses create, analyze, and distribute financial reports efficiently. Oracle is one of the biggest names in the financial software industry. 

Key features 

• Includes customizable report creation and real-time data visibility.
• Multi-dimensional reporting, consolidated reporting, and built-in financial analytics. 
• Collaboration and distribution capabilities, compliance and governance tools, and seamless integration with other NetSuite modules. 

Oracle Cons

• While it offers comprehensive functionality, a potential con is the learning curve for new users. 
• The need for customization for specific reporting requirements.
• Complex software meant for finance teams that want more than just financial reporting.

Oracle Pricing 

Oracle NetSuite’s financial reporting software is typically tailored to each organization’s needs and requirements. Contact the company for customized price quotes. 

FreshBooks is a popular cloud-based accounting and financial reporting software designed for small businesses and freelancers. FreshBooks is one of the leaders in the industry of accounting software for SMB’s, and its main focus is on accounting. However it does have financial reporting capabilities that are simple to use and more than enough for most small businesses. 

Key Features

• Some key features of FreshBooks’ financial reporting software include invoicing, expense tracking, and time tracking.
• Over 100 integrations with payment gateways and other business tools for the most accurate accounting numbers.
• User-friendly interface and is accessible to users with limited accounting knowledge. 

Freshbook Cons

• Limitations in advanced accounting functionalities compared to more comprehensive accounting software. 
• Usually not suitable for larger businesses with complex accounting needs or small businesses expecting significant growth. 

Freshbooks Pricing

Starting at $8.50 per month for the basic plan up to $55 per month for more advanced functionalities. 

Datarails is one of the top FP&A software that caters to small and medium sized businesses. While most FP&A software have some financial reporting capabilities, Datarails stands out in this case as it has dashboards with live updates and visuals , pre-built and customized data models, and an AI chatbot function that gives you quick answers with visuals for financial reporting. 

• Scenario modeling 
• AI chatbot capabilities that give you answers and build reports in seconds.
• Drill down analysis that allows you to filter details by location, date, or any other metric that gives you deeper insights. 
• Completely native Excel which makes an easy transition for finance professionals and short implementation time (2 weeks).

Datarails is an FP&A solution that covers all aspects of the finance department (budgeting, forecasting, planning, etc.) so those that are looking for a cheap solution that covers exclusively financial reporting might be better off with Freshbooks or Multiview ERP. 

Datarails pricing 

Datarails provides customized quotes based on the complexity, number of users, integrations, etc. 

Workiva is a leading provider of cloud-based financial reporting software designed to streamline and enhance the reporting processes for large businesses and corporations. Their platform offers a comprehensive set of features for financial reporting, compliance, and data management.

• Collaborative reporting and real-time data connectivity. 
• Automated workflows, version control, and data visualization tools that make it easy to conduct financial reporting. 
• User-friendly interface. 
• Flexibility, and scalability so it is meant for a wider range of users in comparison to Freshbooks. 

Workiva Cons

• Some users may find the learning curve steep initially, especially if they are new to cloud-based reporting platforms. 
• Workiva uses Spreadsheet functions instead of native Excel. This makes it difficult for finance professionals who are used to Excel as not all of the functions and flexibility are the same. 

Workiva Pricing

Pricing for Workiva’s financial reporting software is typically based on individualized quotes, tailored to the specific needs and requirements of each organization.

Multiview ERP

Multiview ERP is a well tested company (been around for over 30 years) and is unique in the field of SaaS financial reporting in that it specifically features a team of in-house support that works alongside your company and “has your back from day one.” While other financial reporting companies and ERP software encourage independence and as little support as possible, Multiview ERP advertises their support team as an integral part of the software. In addition to reporting, it supports customized capabilities through core accounting, business insights, automations, inventory management. 

• Business Intelligence
• Automated Workflows
• Accounts Payable and Receivable
• Professional support and easy to work with

Multiview ERP Cons

• While customer support is a strong part of their business, some users have reported slow response times due to the overreliance on them. 
• Difficulties creating custom reports. Sometimes they can be too rigid.

Multiview ERP Pricing

Pricing is not shown on their website but cloud pricing averages $150 per user.

Each company was chosen based on a number of factors with a focus on their financial reporting capabilities, key features, what part of the finance team they upgrade, and what size businesses they are meant for. 

• Best for small and medium sized businesses and accounting – Freshbooks
• Best for small and medium sized businesses and upgrading the full finance and FP&A function – Datarails
• Best for small and medium sized businesses and those looking for an ERP solution with extra live support – Multiview ERP
• Best for medium and large businesses looking to improve their consolidation, real time insights, and financial reporting – Oracle Netsuite
• Best for large businesses and enterprises for financial reporting and compliance – Workiva

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