Finance produces plenty of reports. But producing a report and helping someone run a business are two different things.

A traditional financial report is very good at telling what has already happened. Revenue decreased, costs increased, margin was below target.

The obvious question is: so what?

When looking at financial reporting, I tend to come back to three fairly simple questions:

What changed?
Why?
What next?

The first one is usually easy to answer. The other two are where things get more interesting.

If margin has dropped, seeing the change isn’t enough. Was it pricing? Customer mix? Utilisation? Higher delivery costs? One poorly performing business unit? And more importantly, is there something we should do differently because of it?

This is also why more detailed reporting isn’t automatically better reporting. Sometimes adding another dimension helps uncover something important. Sometimes it just adds another table nobody really needs.

The same goes for KPIs. A dashboard with twenty metrics can look impressive, but five well-chosen ones may be much more useful if they point attention to where something needs to be understood or changed.

For me, the purpose of management reporting isn’t to produce the most comprehensive report possible. It is to make the business a little easier to understand and manage.

So whenever I look at a report, there is one more question worth asking:

What decision could someone make differently after seeing this?

If the answer is “none”, perhaps the report needs another look.