Best Practices for Creating Executive Financial Reports Using Dynamic Data

In today’s always-changing business environments, executive leaders are increasingly turning to dynamic data to provide insights on the fly. 

Whereas “static data” is information that’s as accurate as possible at the moment it’s compiled, the firehose of information available, and the cloud repositories that store information, have changed the way companies operate. Today, it’s possible to make financial decisions based on data that’s as dynamic as your company.

Perhaps no area of business has more to gain by leveraging dynamic data than financial planning and analysis (FP&A). Dynamic data makes it possible to operate with the most recent measurements in hand, and it renders periodic report updates unnecessary.

When you use dynamically refreshing data links, your financial reports update themselves. Every time someone accesses them, what they see are the most recent details from your various relevant sources.

Many organizations are already using dynamic reports. One survey from The National Center for Education Statistics found that at least 40 percent of participants already use dynamic reporting tools.

However, not every company is set up to easily produce dynamic reports. Many are dependent on data managers and proprietary solutions. Discussed below are some pointers on how to make the most of dynamic data to generate dynamic reports in the context of financial reporting.

Establish reporting guidelines and templates

No list of best practices for FP&A using dynamic data is complete without emphasizing the need for reporting guidelines and templates. Dynamic data does not come with specific templates or sets of rules. It originates from various sources and presented in different forms using different software.

To take full advantage of the availability of this type of data, it is advisable to have a common presentation template and set of reporting rules.

Businesses that collect information from different branches, departments, or business sections deal with reports that vary in form. Even if your reports are prepared using popular software like Excel spreadsheets, there may still be differences that make consolidation challenging. The data units used may be inconsistently labeled.

For example, your fulfillment department might measure sales as a number of orders shipped per month, whereas your field sales unit might measure sales in contracts signed per week.

This problem is particularly crucial when using dynamic data since these data are integrated into reports straight from their respective sources. If the figures are denoted in different measurement units, they should be converted first or converted within the consolidated report using special functions.

Information from reports that do not have compatible or similar formats will be difficult to compile into a single presentation. Manual data inputting may be necessary, which will likely nullify the dynamic nature of data. Excel pivot tables with dynamic data sources, for instance, cease to be useful as dynamic data sources when the data contained in them is manually copied to a new worksheet.

Provide software training

Sometimes, employees fail to use dynamic data the way it is intended because they do not know how to do it. They are only knowledgeable with the basics of using the data presentation software but are unfamiliar with useful advanced features.

There are also instances when, even if the reports do not appear to be compatible in their format or mode of presentation, the data they carry can still be consolidated with great efficiency by using special software functions. Different Excel sheets, for example, can be copied into a single worksheet, so data can be referenced in one source that contains the consolidated report.

Unless the report formats are extremely radical, it should not be that difficult to perform cell referencing with Excel and keep the advantage of dynamic data. If employees are acquainted with the useful advanced features of the data presentation and reporting software they are using, they would not have to resort to manual data inputting or preparing a consolidated data report from scratch.

There are also times when experienced software users fail to make use of essential advanced features. Many team members prefer to use only the functions that they’re already familiar with and end up not using features that could have made their jobs easier and more efficient.

Automate compiling and processing

Dynamic data is best suited for automation. Neglecting to automate the retrieval and presentation of this kind of data is like deliberately curtailing its usefulness and impact on efficiency. Unfortunately, the familiar software tools most companies use do not come with the ability to automate the seamless consolidation and reporting of data.

Excel, for example, has no functions for full-fledged reporting automation. It has macros that can automate some tedious tasks, but these do not provide the same level of convenience and rich features as apps designed for financial planning and analysis purposes.

There are tools built to bring together information from various sources under a single interface for more convenient evaluation or analysis. They can also provide a granular view of the compiled data to facilitate contextual examination.

Executive financial reports are supposed to enable informed decision-making. They should present the data in a timely manner and as accurately as possible. Manual data entry is definitely not the best way to prepare these reports. Data collection and presentation preferably have to be automated to achieve rapid report generation while eliminating errors in the reported details.

Leverage dynamic data agility

Financial planning and analysis have shifted focus over the years. Conducting annual, quarterly, or periodic financial analysis is no longer the dominant practice. Nowadays, organizations embrace agile and continuous planning processes to become more adaptive to market trends and other factors that affect business operations.

Businesses understand that if they want to thrive or at least survive, they need to be more dynamic in how they deal with market forces.

They cannot afford to be merely reactive – or worse, stuck with fixed targets. They have to make plans and adjust goals based on the updated information they receive.

As such, report preparation should draw upon the speed, efficiency, and accuracy advantages of automation, advanced software features, and data consistency. Executive financial reports should be available on-demand without compromising on reliability.

Prepare reports with emphasis on the intended users

Dynamic data is still raw data. To make sense of it for financial planning and analysis, it has to be sorted and presented based on what the target users need.

Generally, those involved in FP&A have the following as their core responsibilities:

• Preparation of budgets and budget reports
• Comprehension and communication of an organization’s financial situation
• Examination and setting of standards for cost efficiency
• Comparison of budgets and fund use
• Formulation of growth and expansion plans
• Generation of financial forecasts

Financial reports should present the latest information that ensures that budgets are in line with what an organization really needs to support its goals without being too conservative or overly optimistic.

Some data, referred to as “noise,” will have to be omitted to keep reports easier to read and scrutinize.

Consider AI-aided analysis

Even with the most up-to-date information, there is no guarantee that managers can reach the best decisions by examining reports with their own expertise and experience. There is nothing wrong with utilizing artificial intelligence-powered models and forecasts.

Many FP&A software products include the ability to integrate with ERPs and CRMs to achieve better performance metrics monitoring and generate insightful financial projections. They can also be used to come up with sensible scenario planning by analyzing historical data.

Financial planning and analysis dashboards should have the ability to convert historical data into quantifiable future scenarios. Some would describe the output of FP&A as the ultimate product of accounting. It not only examines the current situation of an organization based on relevant information; it also helps establish expectations and facilitates planning. Employing AI for these use cases simply makes sense.

Squeezing the most from dynamic data

Information is not knowledge, and data does not always equate to insights. To make sense of data, it has to be consolidated and presented contextually. Dynamic data may depict the most recent situation on the ground, but it is rarely revelatory enough in its raw form to facilitate excellent decision-making without consolidation and contextualization.