One of the most common failings of a finance team is the way in which we treat the information needs of our key managers, and yet it's done for the best of reasons.
Faced with a management need for information such as a Board Report, we might be tempted to share the information in a form that works for us as accountants. Whilst good managers will have a strong grasp of the finances, we need to think hard about what it is that they need to know.
Traditional financial statements such as Income Statement, Balance Sheet and Cash flow will usually be an output of the Financial Management System of the company, and part of the standard suite of reports, but they are unlikely to be initially the key document that the Manager needs to see. Whilst it's a little more work, a management report that focuses on the key business drivers and metrics will be far more useful to the Manager and will improve transparency and clarity of the information and as a consequence improve the decision making in the business.
So, the next time you have to prepare a financial report for a management meeting or for a board meeting, ask yourself what your target audience really needs. Of course, unilaterally changing the format is probably not going to win you friends so why not schedule a meeting with the Manager, tell them that you are considering a change to improve business communications and ask them what they would like to see? Of course, a draft outline of what you are planning will help to sell the advantages of change. You also need to be careful to ensure that the new report is factual and not reliant on your value judgements about whether something needs to be included.
If you are a Director or Board member reading this, ask yourself whether the financial information you are provided with really meets your need as a manager. If not, talk to your finance staff about making the information more relevant to the business decisions you need to make.