Picture of financial reports to illustrate month end reporting.It used to be that the month-end financial reporting package consisted of an income statement and balance sheet, and maybe a statement of cash flows. These are the three basic statements that every bookkeeper can easily generate at the end of each month. As technology has advanced and business owners have become more and more data-driven, it’s become critical for financial leaders to be better at tracking trends, analyzing the changes, and incorporating data from operations into overall viewpoints for the CEO and Management Team.

The month-end package is no longer comprised of your company’s financial statements alone. Just as the role of the accounting department and the role of the CFO continues to evolve, so should the month-end report. The month-end report should be a collection of management reports that capture key data your team can use to make decisions and drive the business. It should include much more than just your financial statements.

What Should Your Month-End Reports Contain?

Month-end reports should certainly include your financial statements. But they should also include operational data, metrics, and dashboards that are both usable and meaningful. Remember, whatever data is provided should be used to make decisions.

For example, a month-end report for an eCommerce company might include the following:

  • Financial Statements:
    • Income Statement
    • Balance Sheet
    • Cash Flow Statement
  • Margin Analysis by SKU, Customer (for Wholesale), Product Line
  • Financial Metrics: Average Order Value (AOV)
  • Sales & Marketing Metrics:
    • Click-Through Rates
    • Conversion Rates
    • Website Traffic
  • Operational Metrics:
    • Number of Repeat Customers
    • Inventory Turns
  • Social Media:
    • Number of Followers on Facebook or Instagram. Better yet, level of engagement and eventual sales.

Depending on the size and complexity of your business, you could have more, or fewer, metrics to track. Other types of business, e.g. manufacturing, business services, SaaS, etc., will have different KPIs that are unique to those industries.

Be careful though… Providing meaningful useful information at month-end does not mean overkill with useless data. Businesses often adopt dashboards and metrics, but sometimes they go to the other extreme and enter into “analysis paralysis.” What should your month-end reports contain? Not so much that there is an overload of information that cannot be used effectively or at all.

The Value of Efficiency

The month-end report should not be a binder that is 4 inches thick. The ideal financial report at month end should be one that the executive team can review in one hour and get a good feel for where the company is and where it is going. This will vary from company to company. In general, the report should be detailed enough to capture the most important items for making decisions but condensed enough so the management team doesn’t need to spend a full day reading it.

The CFO is responsible for gathering this data by working hand in hand with accounting and operations. A good CFO is actually someone that has a very good understanding of the operations of a business. The CFO must fully understand and interpret the operating dashboards and metrics before the information is passed on to the CEO.

Ideally, the CFO will provide a thorough analysis of the results. They will look at the trends over a period of time, use them to create and/or update your financial forecasts, then provide an interpretation of the results along with recommended next steps for the management team.

Summary

The month-end financial reporting package should contain more than just your financial statements. It should also capture the following:

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  • Key operational data that is useful for making meaningful business decisions
  • Key metrics and dashboards for your business and industry
  • Short and sweet insights so the executive team can review the report in an hour or less