Best Practices for Financial Reporting
Every good businessman would agree that astute business decisions must be made on timely, accurate and thorough financial information. And furthermore, that this information is best gleaned through financial reporting designed to support high-level decision-making.
With that in mind, below are serveral best practices to consider when preparing your financial report if it is to best reflect the performance and financial health of your company:
- Know Your Audience: Perhaps the initial consideration should be the audience that will be reading the report. It goes without saying that large global companies will present the report to their Board members and financial directors. This doesn’t mean that small to mid sized companies without a Board of Directors don’t need to have, or can’t benefit from, comprehensive financial reporting as well. They most certainly can. The same premise holds true in that the information gathered must provide senior management with the requisite financial insights to effectively and profitably lead the company.
- Budget Resources Accordingly: Depending upon the scope of the financial reporting, companies may need to assign specific resources for the required information gathering. Preparing a comprehensive financial report can be labor intensive and may over burden in-house staff that are already engaged in fulfilling the time sensitive and robust responsibilities of their position. It would seem that the most sensible option would be to bring in an external resource to prepare the report in a timely and effective manner. (The CFO Squad would be happy to discuss this option with you.)
- Clarity is King: Your financial report must be clear and devoid of obtuse language and jargon that do not serve to enlighten, but rather will minimize the impact and importance of the information being provided, and might even serve to confuse and hence impede action.
- Keep Investors In Mind: Every company at one time or another will find itself needing to raise capital. This might be in the form of debt or equity. Either way, the financial reports of the company must be geared to present in the best light possible the ability of the company to sustain both current and future financing. Should this be your goal, the preparation of the financial statements and associated narratives can mean the difference between a successful raise and failure.
The Bottom-line, the information contained in the financial report must eliminate uncertainty and influence financial decision-making and hence must be free from error, entirely neutral, and highly relevant. Anything less and the value of the report is undermined.
The CFO Squad has the experience to help guide your management team along these paths and provide your company the expertise needed to succeed. Contact Us Today.