In the spirit of Valentine’s Day, let’s review the 4 C’s. If you are in the market for a diamond, you focus on carat, cut, color, and clarity. At Reporting Dynamics, we love great financial reporting, so we focus on our own 4 C’s – completeness, correctness, composition, and communication.
- COMPLETENESS takes the #1 spot for a reason. An incomplete data set can lead to bad decisions. Make it a habit to tie out your totals to another source. And whatever you do, do not get lulled into complacency by “materiality”. Let’s say when you try to tie out your total, you are off by $50,000. For your analysis, you may decide $50,000 is immaterial, so you don’t bother to find out why your totals don’t tie out. Only later do you learn that your immaterial $50,000 was actually $950,000 offset by $1,000,000 – and these numbers are NOT immaterial to your decisions. Take the time. Tie it out. It is worth it.
- CORRECTNESS should be a basic requirement of any reporting. Spreadsheets should foot and cross-foot. Percent calculations should make sense in total lines and variance columns. Totals, subtotals, graphs, etc. should reference the appropriate ranges. It all sounds simple, but I’ve seen these mistakes a hundred times. Don’t let your hard work and credibility be undermined by problems that can be avoided with a quick review.
- COMPOSITION focuses on the format of the report. Is it a spreadsheet, a chart, a graph, or does a combination of all three best tell the story? If you are analyzing sales, do you want to see your total sales trend by month versus prior year, or is understanding a change in the product mix of your sales more valuable? This is where you get creative (read “Why Blank Page Vision™ Is Important”) and find the best way to showcase your analysis and highlight your findings. It may make sense for certain standard reports to consistently use the same formatting month after month, but be aware that when business conditions change, you may need to report your numbers a different way to remain effective.
- COMMUNICATION of your results is the hallmark of great reporting. Even the best spreadsheets and graphics should be accompanied by an explanatory narrative. Report recipients should not be expected to figure out what your analysis has unearthed. You’ve done the analysis, drawn conclusions, and composed your report. Make it more valuable by summarizing your findings and pointing out recommendations for action.
Great reporting can facilitate better decision-making. Great reporting can transform your business.