In an era of short attention span and decision fatigue, it is important for financial reports to be clear, simplified, and relevant.
These financial reports must be short enough for people to want to read it but comprehensive enough for it to touch on critical aspects of the business. Obviously, all these are easier said than done.
Striking a balance between visibility in all of the figures versus reporting too much is a tricky business. We have finally understood and come to terms with the fact that human brains just can´t process too much data at once.
Dumping too many figures to one person for that person to understand and make strategies out of is just exhausting.
This decision fatigue of senior managers from an overwhelming amount of data is perhaps at the very heart of why organizations today are choosing to invest in new technology. They hope that new technology can help them quickly gain access to decision driving reports.
The questions then become – when is it too much information in reports and how can you be comprehensive without triggering decision fatigue?
To answer this question, a bit of background is necessary, and we will begin that background with Epicor Financial Planner otherwise known as EFP.
EFP is a subscription-based financial reporting and budgeting solution that has live integration with Epicor ERP 9&10, Epicor Enterprise, iScala, and Prophet 21. It can also integrate with a combination of various ERP systems in and out of Epicor.
In the last 20 years, the EFP team has worked with several finance organizations to try to help them improve the quality of their reports by streamlining their financial reporting process and automating these reporting tasks to improve the reporting cycle time.
In the last 20 years, the EFP team has learned that the optimal number of KPIs on a report is 3-6 KPIs. Placing KPIs beyond 6 is generally not a good idea. However, it is important to remember that just because the optimal number on a report is 3-6 KPIs doesn´t mean you can´t present any more.
What EFP has learned over the years is that you can still present more data, but you just need to have a clear hierarchy in the reports. You must visually emphasize which ones should be read first so that the most important KPIs take the best spots in the reports. All the other KPIs that you want to include can occupy the less strategic positions.
What helps achieve this visual organization is the use of a financial reporting dashboard that will allow you to build interactive dashboards and summaries so that you can convey your message in a fluid, storytelling kind of way.
With the use of an interactive dashboard, you can then set the KPIs in context with historical trends, and targets so that you have a coherent, easy to comprehend, decision-driving reports.