CFOs and their teams need to report on complex information on a regular basis, but what if no one’s really reading them?
Financial reporting tends to be filled with all kinds of abbreviations and acronyms, whether they refer to industry regulations, key performance indicators or specific kinds of metrics. There probably aren’t too many examples, however, of CFOs whose teams include a TL;DR section somewhere near the beginning.
As many social media users (or anyone with a teenager) would know, TL;DR is shorthand for “too long, didn’t read,” a popular way of dismissing content that proves so time-consuming or complex they won’t give it their full attention.
Though an investigation by BBC News has challenged the assumption that human attention spans have winnowed down to a scant eight seconds, there’s no arguing with the fact that we have more devices, apps and other distractions in our lives than ever before. That means when finance departments approach reporting in 2019, they might need to think about adopting a “less is more” approach.
Too Much Information?
The head of credit research at multinational asset management firm Schroders noted recently that the debates around the frequency of financial reporting have sometimes overshadowed issues around length.
“It’s too much information, it’s not always the right information, and it costs a lot to produce and process,” he wrote. “(A Form 10-Q) arrives in the form of an unaudited phone-book-sized document filled with legal jargon and accounting boilerplate.”
This is bad enough in a corporate environment where financial reporting should be thoughtfully reviewed by everyone from investors to regulators. In a public sector context, it might even be worse. Don Peebles, head of policy and technical for the U.K.‘s Chartered Institute of Public Finance and Accountancy, wrote an op-ed earlier this month that made a link between reporting length and public trust:
One characteristic of reporting under international standards has been the substantial increase in the amount of information reported . . . As leaders of public finance, we are keenly aware of the need to balance between compliance with high professional standards, and clear, intelligible, and – where necessary – streamlined information focusing on the items that a wide user group will require.
Of course, financial reports from local governments might need to be exposed to a particularly wide audience, including the media and even everyday citizens. Even within the enterprise, though, the shift among CFOs and their teams to become more data-driven and influential means striking a better balance between transparency and ‘TMI’ — too much information.
An Audience-First Approach
According to finance experts interviewed for a feature story on In The Black, however, CFOs have to ensure that brevity doesn’t come at the expense of providing all the necessary details. This comment stood out in particular:
For someone to become a fully qualified accountant takes approximately six years. To suggest that reporting should be simplified is like saying that engineering drawings should be simplified so that everyone can read them, but that is a joke because it probably means the building will fall down.
Instead, others in the same article suggested that in addition to making reports shorter, CFOs may have to spearhead efforts to improve the financial literary among other members of the team. An article in Global Banking and Finance suggests this might be easier to achieve as finance teams spend more time thinking about their audience and what each one really needs.
“The three financial statements (Profit & Loss, Balance Sheet and Cashflow) are good for transparency and financial control, so these statements should be shared with the Board of Directors,” the article said. “However, it is also worth considering a one page dashboard showing key metrics and summaries which is dynamic and can be used as a quick snapshot. This gives the Finance team the opportunity to highlight key issues that are pertinent at that time.”
It may take some practice to shift financial reporting to a “less is more” style, but the more effort you put in, the less you’ll have to worry about whether what’s being produced is actually being read.
If the long and the short of it sounds familiar, learn how Vena can help you deliver stunning, insightful and decision-driving reports.