Is knowing your business enough to write great finance reports?

Natasha Hughes, practice head at Board Intelligence and former policy adviser to the Prime Minister and Chancellor of the Exchequer, examines whether knowing your business is sufficient for producing high quality finance reports

THE board pack is the most prized document of each organisation. Containing financial and strategic data about the health of the business, it outlines decisions that will set the direction of the firm. Subject matter experts within the business are tasked with writing reports for the pack and it’s often assumed that because report authors know the finances of their business, they are able to write effective reports. Is this the case?

What challenge do report authors face?

Given that approximately 70% of a board pack is financial data, the finance team are arguably one of the most critical groups of report authors within a business.

Whilst writing the finance report provides the opportunity to demonstrate knowledge on the finances of the business, it is hard to make the most of the opportunity when you don’t know what the board is looking for.   Report authors may be experts on their area of the business, but rarely have the experience to know the questions on the board’s mind or what the board is looking for from the finance report.

In the absence of knowing what ‘good’ looks like, finance reports tend to include reams of management information, with data cut in multiple ways, in the hope that the author is providing answers to the questions the board might ask. Despite best intentions, these reports often become a ‘data dump’, blinding all but the most seasoned of finance professional to the implication for the business and leaving the board none the wiser to the real story behind the blizzard of numbers.

Being a subject matter expert is a necessary, but not sufficient condition, for high quality reporting. Research conducted by the Cambridge Judge Business School in 2016 found that training of report authors is a primary determinant of the quality of a board pack.  In order to set report authors up to succeed, they need to be equipped with the skills to summarise, structure and present financial information in a way that gets to the heart of what matters to the board – and this is where training comes in.

What do best practice finance reports look like?

Three tips for writing an effective finance report include:

• Learn about your audience: Put yourself in the shoes of your board and consider what they already know about the finances of the business and what questions they’ll want answered. Considering these questions will help you write a report that provides the right level of detail and is tailored to your board.

• Deliver insight: Most finance reports provide a status update of current management information, but can leave the reader guessing as to its materiality. Ensure your report delivers insight by bringing out the ‘so what?’ or implication of each piece of data for the business.

• Communicate effectively: Board members are short on time and need papers they can digest quickly and easily. Tell the story of your finances by providing narrative to support your data and bring out the key message of your paper in an Executive Summary.