7 Quick Tips to Bring Financial Reports to Life for Your Clients

Posted on 15th March 2017 in Advisory

Written by Amy Harris

Learn how to bring your financial reports to life, with our seven top tips to get the most out of data visualisation and the insights they can afford. It makes getting on top of your numbers so easy, that you’ll find you can even cut back on a coffee or two a day.

Some know what they are looking for and for others, it’s a minefield. What a busy business owner requires from you – their accountant – is a means to pull out the financial highlights, spot approaching issues and put the relevant resolutions in place in a timely and effective manner.

In essence, clients need you to demystify the numbers and give them genuine confidence in their long-term planning and decision-making.

So, how do you take dry financial data and breath life into the numbers for your clients? We’ve researched seven top tips for more engaging reporting conversations.

But, before we get started, here is the big secret…

You can relax. It really isn’t that complicated

If you’re starting from scratch, your intro reports don’t need to be anything too fancy. In development terms, we call this a Minimum Viable Product (MVP). It’s simply something to demonstrate where you’re heading and it sparks discussion. From this you can do the most learning in the most effective manner.

For example, our accountant and bookkeeper partners prepare an Introductory Board to kick off FUTRLI which their clients, which is effectively a template for the practice. Most businesses have the same challenges so you can start here and use this as the foundation of your questioning process.  You want to understand their business inside out so you are providing the most relevant view of their business. If you can show them something that is simplified and that makes sense to them, you can use it as the springboard into a more detailed discussion.

Understand their business model

It’s critical to understand the underlying business model of your client.

Without a detailed grasp of their core objectives, their internal processes and the underlying drivers behind the delivering of their products/services, you don’t truly have the knowledge needed to analyse and review their financial reports.

For example, if your client is a manufacturing business then you need to understand the costs of raw materials, labour costs and new machinery – not to mention the impact that changes to these numbers will have on their overall unit price.

Schedule Variance

This can easily be answered with questions or a quick review of their finances on a Board and you can use one of our templates for speed.  business is a personal thing – and we challenge you to find someone who doesn’t want to talk about the company they built, manage or even work for. You can use this to your benefit.

With a basic understanding of the underlying model, you’re in the best possible position to focus on the right numbers and the right key performance indicators (KPIs). And, if you need help, there are resources like our KPI Library which tells you what metrics to measure and how.

Enjoy getting under the skin of the business and its people

Each business is unique. And the people, culture and personalities within the company are a significant influence on how the business functions as a unit.

Getting to know the key management team – and what’s important to them – helps you effectively highlight the goals and objectives that carry weight for this business.

Is their core aim purely to make big profits and then sell up? Or is growth and expansion the top item on their agenda?

Is a lack of focus on cost-effectiveness the reason for failing cash flow? Or is the business choosing the wrong customers and spending too much time servicing the least profitable clients?

By getting under the skin of the business and its management team, you can tailor their financial reporting to zone in on the most pertinent and important numbers.

Put the right metrics and KPIs in place

With a clear breakdown of the important areas of financial focus, you can tailor your client’s financial systems to provide the right metrics and data.

If the client requires a granular view of spending on raw materials, for example, you can customise their Chart of Accounts and tag each specific element within that cost pool. With costs recorded in this level of detail, you have the data at hand to produce extremely specific reporting around their spending on materials. And, over time, this gives you a clear overview of financial performance.

For example, is the client spending too much on labour costs without getting full utilisation? Does the average margin per client need to be improved if the client’s going to meet its profit target for the next 6 months?

With the correct metrics and KPIs in place, it’s possible to answer these questions – and make the necessary adjustments to the business model to improve performance.

Do not underestimate the power of visual communication

Accounting data doesn’t have to be represented purely through plain figures – charts, graphics and visual representations of the data add real resonance for clients.

As an accountant, numbers speak to you. But the same doesn’t always apply to your business clients. A business owner may have a razor-sharp strategic business brain, but baulk at the site of complex numbers in a spreadsheet. For them, the numbers don’t speak their language, and that can limit the insight they can glean from them.

But show the client the same data represented in a clear pie chart and the insights start to jump out. When the ‘raw material costs’ slice of the pie is clearly more substantial than the ‘gross margin’ slice, the inherent spending issue becomes clear.

Using the new breed of business intelligence software, you can visualise the client’s accounting data in whatever form they choose. Monthly cash flow can be shown as a bar chart, or production costs as pie chart – whatever the client requires.

Business Intelligence

Don’t just focus on the financials

Reporting doesn’t need to focus purely on the financials. There are other non-financial metrics that impact on the long-term success of the business.

Expanding your scope to also include non-financial targets and performance brings significant additional value to the client. Areas like customer satisfaction, social media activity, website hits and customer attrition are all important factors to consider when building management reporting.

Is there a link between website traffic and online sales over time? Is there a connection between high customer satisfaction figures and the client’s ability to upsell additional products and services?

With the wealth of cloud-based tools now available, it’s possible to measure, track and analyse non-financial data. And that leads to insightful conversations about the holistic strategy that underpins the whole business.

Use real-world scenarios

Financials make more sense to clients when put in context – when they become more than just numbers and can be seen in a genuine scenario.

The financial and non-financial data recorded in your client’s business systems is a potential forecasting goldmine. By analysing this data and identifying the historic patterns, you can effectively project the numbers forward into the future. And this ability to build accurate forecasts is invaluable when scenario-planning.

If the client loses a third of their workforce, how will this impact on their profits in 6 months’ time? If they move to a cheaper supplier for their core production materials, what will that cost-saving mean for next month’s cash flow?

Combining empirical data, sound forecasting and strategic real-world scenario building, you can build a picture of the client’s future that’s both enlightening and based in fact. And that gives the client real confidence in their future.

Show performance and progression over time

It’s easy for clients to fall into the trap of seeing their reporting as something static – as a collection of numbers that are trapped in time.

The way to alleviate this misconception is to demonstrate the progression in the client’s key metrics from month to month – to show how performance is improving, failing or fluctuating over time. And that their business is a living, breathing organism with all the dynamics in performance that this entails.

Setting clear targets is one way to help engagement with the client, and put meaningful drive behind their business’s performance. Working towards a clear target builds confidence and long-term vision – and that’s a fundamental part of your role as their trusted business adviser.

How FUTRLI brings reporting to life

FUTRLI takes the concept of business reporting and turns it on its head.

By integrating our cloud solution with your client’s accounting software and business systems, you get access to all their financial and non-financial data. And by utilising our flexible system of ‘Boards’ and visual reporting you can produce engaging management reporting that that’s specifically tailored to the needs of each client.

The reporting is visual, innovative and insightful. It moves away from cold numbers and breaks down the communication barriers that may exist between you and your business clients.

Find out more about how FUTRLI enhances your client conversations