Tips for Providing More Analytical Reporting

April 14, 2018


As accounts payable managers free their time through automation and integrated systems, the AP manager’s function is transforming from one of “sweating the details” to delivering value-added information and analytics.

“AP will increasingly be analyzing data and presenting more detailed financial reports,” says CFO Keith Perry. “It’s important to begin looking beyond the numbers and to start adding more narrative.”

“Narratives for financial reporting are fundamental to the reporting process, where we translate the raw data of the general ledger (GL) into useful information,” notes Perry. “While writing may not come naturally to many of us, communicating information in finance is essentially the same as communicating ‘How to program your DVR’ or ‘Why buy this candy bar?’ You’re providing that functional information or the qualitative story that helps guide the user to understand the context.”

Consider Your Audience

“Base your AP communication on the wants and needs of your CFO as opposed to simply reporting the financial figures,” Perry advises. “Distill the information down to the level of what they need to know to meet their objectives. The information you provide will be used to help manage the operational aspects of the business.”

Here are some steps to follow when creating your financial report and narrative:

Step 1. Ask yourself the following questions:

  • Can the CFO actually do anything with the information, or is it just data?

  • Does the information you are reporting on fall within the normal course of business, or does it vary in any way from that?

  • Are you escalating issues that are handled at your level, or are you keeping the conversation at the CFO’s level?

  • Can you call out a business significant opportunity or threat?

Step 2. Include exhibits that are always the same in form from month to month so they need no explanation. These graphs should be as simple and clear as possible.

Step 3. Add narrative to describe things that do need explanation. What do you want your CFO to know and do? Include a narrative that would explain variances, unusual challenges or problems, possible solutions, and opportunities for improvement.

For example, are purchase orders coming in late and creating a fire-fighting environment in AP? Translate that to “Our AP invoicing processes and internal controls are being jeopardized because people are not using the proper workflow” and tack on a workflow process cheat-sheet. If the CFO forwards it to purchasing, it will get more response than you would get by complaining.

Keep These Factors in Mind

There are three key challenges in the process of creating a financial narrative:

  • CFOs have varying expectations. Some CFOs need to see the detail to be comfortable; others just want the bullet points. Tailor your narrative to the style your CFO prefers.

  • Avoid getting caught up in minutiae. The nature of the accounts payable function is that AP managers tend to focus on small details. But keep this in mind: while trying to paint a picture of the forest, you may end up obscuring it with too many individual trees.

  • Don’t try to anticipate and answer every question. Like your CFO, you have limited time. Invest it in fostering a dialogue around the date, drawing connections, trends, and relationships. Elevate the conversation.

Editor’s Note: Keith Perry is a Consulting CFO who specializes in building accounting and finance staffs, defining systems and processes, GL definition, and operational controller skills up to corporate strategy and governance.

Subscribe to our Monthly Insider

You may unsubscribe from our mailing list at any time. Diversified Communications | 121 Free Street, Portland, ME 04101 | +1 207-842-5500