{"id":35592,"date":"2025-01-18T22:37:36","date_gmt":"2025-01-18T22:37:36","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/5-hallmarks-of-a-good-financial-planning-report\/"},"modified":"2025-01-18T22:37:36","modified_gmt":"2025-01-18T22:37:36","slug":"5-hallmarks-of-a-good-financial-planning-report","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=35592","title":{"rendered":"5 Hallmarks of a Good Financial Planning Report"},"content":{"rendered":"


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The woman beside me and I were reviewing the financial planning report and looking at the travel expenses entered in their General Ledger (GL) and in my report. They didn\u2019t match. My financial planning report was in a different format than their Ledger and I pointed out that if we reorganized the cost centres in the GL to match the reporting format, she wouldn\u2019t have to do so much reconciliation.<\/p>\n

\u201cThat\u2019s true,\u201d she said, \u201cBut they keep changing their minds about what they want.\u201d Then she corrected herself. \u201cActually, they have been pretty consistent since they started that three-year plan.\u201d<\/p>\n

And exactly that is the secret of financial reporting: the planning process needs to drive reporting. To give you an overview, here are five hallmarks of a good financial planning report. It should:<\/p>\n

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  1. highlight the organization\u2019s drivers;<\/li>\n
  2. make responsibilities clear;<\/li>\n
  3. span more than one year;<\/li>\n
  4. be intuitive to non-financial readers; and,<\/li>\n
  5. be brief.<\/li>\n<\/ol>\n

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    1. Drivers<\/strong><\/li>\n<\/ol>\n

      What critical forces contribute the most to your business? (Hint: If your list has more than 10 items on it, try again.) For example, commodities prices and the foreign exchange market might have a significant impact on the cost of your raw materials, which in turn affects your profit on each sale. Maybe your research department has contributed new products that have led you into new markets and higher sales. Maybe your business is highly sensitive to inflation or interest rates.<\/p>\n

      Whatever you identify as your business drivers, make sure their effect is front and centre in the financial statements. Don\u2019t bury them in some page 10 inventory schedule.<\/p>\n

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      1. Responsibilities<\/strong><\/li>\n<\/ol>\n

        You should have one schedule that breaks down your goals by the people or department responsible for carrying them out. Often this is done by having a separate column for each one. Every number in the report is someone\u2019s responsibility, so there can be no finger pointing.<\/p>\n

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        1. Multi-Year<\/strong><\/li>\n<\/ol>\n

          Even if you feel that you can\u2019t see more than six months into the future, creating a multi-year plan helps you see the relationships between the different elements of your business. If this is unfamiliar territory for your staff, make them do it anyway. The trick is not to ignore the results when real-life experience makes mincemeat out of your forecasts. Have a Lessons Learned<\/a><\/u> session with the managers and go through the reasons why the forecast went south. Everyone will learn, and forecasting abilities will get better.<\/p>\n

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          1. Intuitive<\/strong><\/li>\n<\/ol>\n

            Good leaders can see through the fog of business and maintain a clear vision of their goals. Good financial executives can grab that vision and express it in financial statements. Some tricks of the trade are:<\/p>\n