Financial reporting can sometimes feel like a necessary evil, but during times of economic upheaval, reporting gives finance leaders the visibility into operations they need. This insight helps them make the right decisions at the right time and avoid unwanted surprises.
While every business, and every downturn, is unique, there are some common strategies for managing setbacks that finance leaders can apply to ensure they come out stronger than ever.
Strategy consultancy McKinsey & Co published a recent guide for CFOs to navigate the current business climate. Key takeaways include:
These three key tactics — and the dozens of smaller actions they are comprised of — are enabled by quality reports. Although they can seem mundane and tedious, accurate reports remain the best way for businesses to obtain snapshots of their operational health.
Reporting is also something many businesses find difficult — more than 41 per cent of businesses find it challenging to interpret the data, failing to pick up on the insights that are vital for sound decision-making.
With relatively few changes, however, businesses can make their reports more timely, accurate and, most importantly, actionable. Here are several ways business leaders and employees can improve their reporting — to create greater value and spur concerted action for success:
Provide clarity
While the information in reports is certainly crucial, they must also be clear and easy to read if they are to be quickly and easily understood. Often, business leaders are presented with reports that lack sufficient data or are an avalanche of information. Neither approach is suitable during times when quick and accurate decision-making is needed.
Time-pressed business leaders need reports that don’t simply present data as is, but also include contextual layers of information that can efficiently communicate important details or changes within data sets. This allows readers to obtain a clear picture of conditions at a glance, and subsequently devote headspace to process for possible risks or trends.
Take control
During challenging times, it can be easy for businesses to get caught up in reactionary decisions. This can quickly lead to increasingly panicked decision-making, which is likely to prove ineffective in the long run. Once urgent matters have been dealt with, it’s important to frequently survey the key indicators across the business. This will help identify last-minute changes as they happen and give leaders as much time as possible to make controlled, informed and rational decisions — at the right time.
Use real-time reporting where possible to ensure leaders have a heads-up on which investments are performing as needed, where they can make operational improvements and build traction with quick wins across the business. With diligent analysis of real-time operational reports, leaders can better identify daily issues that can impact the business — which may easily be lost in the deluge of monthly reports. Projecting this information across several months, businesses can begin implementing changes that stabilise the business and negate problems.
Stay agile
Once stabilised, business leaders must take steps to move the business forward. Start to introduce micro-changes to daily operations with quick feedback loops — this will help the business stay agile and be ready for more external changes. Take a test-and-learn approach, perhaps adding a new service or product offering, and study how these changes impact business performance and make any tweaks accordingly.
It’s important to look for bite-sized pieces of incremental improvements, as an unstable environment may necessitate a change in direction at a moment’s notice. Investing in large-scale projects that take many months (or years) puts your business in a precarious position if that investment is no longer tenable halfway through its rollout.
While it may seem tedious to some, now is the time to place an increased focus on solid reporting. It is important for business leaders to have their finger on the pulse if they want to successfully guide it through to the storm.
This is not the time to get bogged down with unreliable information. Today, every business has access to sophisticated reporting tools that can make reporting intuitive and painless when used effectively.
Use the tools, training and, most importantly, draw on your experience. Use everything you have at your disposal to keep your business moving from strength to strength.
Jason Toshack, general manager ANZ, Oracle NetSuite
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