Internal and management reporting
What is management reporting?
The definition of management reporting can be expressed broadly as reports that management uses to run the organization, make business decisions, and monitor progress.
Management reports help managers monitor the smaller details of their department. Employees submit managerial reports to their managers.
Management reports range in content and breadth. Management reports contain financial and operational reports on a small segment of the business. Management reports can also contain complex and involved reports like the P&L document, accounts receivable aging, or the operating budget.
Management reports are a form of business intelligence. Management reports contain performance data and analysis. This is so management can make decisions and advise other senior executives. Often these reports include proprietary information and are for internal use only. They do not follow GAAP or IFRS.
The goal of management reporting is to:
- Measure and monitor specific performance metrics and KPIs.
- Understand your status, health and what you should do next.
- Determine benchmarks.
- Ensure better communication between stakeholders, colleagues, and executives.
- Guide your next steps.
- Force you to have an action plan.
- Monitor performance frequently.
How to prepare a management report?
There is no one way to prepare a management report. Every management report has a different purpose. Here are a few general best practices that you can apply:
- Set specific goals and understand the results you desire before doing anything else.
- Determine the most relevant KPIs for your manager. Managerial views will be broader and more long-term while you might have more specific KPIs in mind.
- Use a combination of hard data and storytelling to present your results.
- Compare and contrast progress-over-time and year-to-year results using a combination of historical and real-time data.
- Use graphs, charts, dashboards, heat maps and other visualizations to help visualize the data’s story.
- Make sure your data is correct. (A single, automated source of data helps!)
- Your storytelling should be clear, concise and seek to answer all potential questions from your superior before they ask.
What is internal reporting?
Internal reports keep internal stakeholders “in the know” of company activities. In the case of financial reports, internal reports are used to monitor a company’s financial health and for strategic decision making.
Internal reports come from every department: marketing, customer service, IT, finance, sales, and operations. Internal reports often contain proprietary information that is confidential and should not leave the organization.
Like management reports, internal reports function to:
- Increase accountability
- Establish goals
- Monitor KPIs and performance
- Aid in transparency
- Align and unify departments, team mates, and decision makers
Examples of internal reports include:
- Cash reports
- Variance analysis
- Finance color books
- Status reports
- Forecast reports
- Financial reports
- Board reports and packages
- Budget books
- LoB reports
- Variance reports
- KPI reports
- Systems reports
- Internal audit reports
How to write an internal report?
Like managerial reports, there’s no magic recipe to creating an internal report. Similar to managerial reporting, there are some best practices you can follow:
- Determine the KPIs and performance metrics you should monitor.
- Add visuals to the report using graphs, pie charts, dashboards, whitespace, heat maps etc.
- Create colorful but direct narrative to help executives understand your findings.
- Compare real-time information and historical information over given periods of time.
- Ensure the figures you’re reporting are correct and consistent.
- Outline next next steps and action items based on results.