Monthly financial reports are integral to strategic decision making. Therefore, ensuring that they are accurate, relevant and sent to stakeholders in a timely manner, enables business agility.
To achieve this, as well as collating relevant monthly performance reports for different stakeholders, you should monitor performance with daily financial control reporting to validate the accuracy of your information.
This not only applies to the leading financial institutions but also to microfinance networks and challenger banks.
Create Relevant Monthly Financial Performance Reports
At month-end close, the CEO, the Executive Team and the Board require reports with specific information about financial performance. Three reports, specifically, need to be produced:
Financial position and earnings report
Also known as balance sheet position, you should make sure to include information about loans and deposits – have they risen or decreased? And what is the return on your loans and deposits?
Performance ratios report
This should comprise of Return on Assets, Net Interest Margin, Efficiency Ratio, Net Profit and Loss values.
- Financial scorecard vs. budget report
Bringing together the KPIs from the first two reports; this report compares your monthly performance against strategic targets.
Both the financial position and earnings report and the performance ratios report should contain comparison data from the previous month, the same month the previous year and they should incorporate a month-end trend line for the previous 12-24 months.
Line of Business Directors, Regional Directors, and Branch Managers will need these reports, but they may only require an overview of the performance of their own line of business, regions or branches.
By creating these reports, you ensure that all stakeholders receive the same relevant performance indicators and are thus working towards the same goal.
Ensure Reliability and Timeliness with Daily Financial Control Reports
As the finance department, you must ensure the figures included in these reports are accurate. The key to this, as mentioned, is monitoring via daily reports.
Continuous daily financial control speeds up the month-end close process of collating performance reports due to the reduction of data anomalies and subsequent investigations.
To achieve this, you should monitor the following reports on a daily basis:
- Daily balance sheet movements
- Daily P&L movements
- Trial balance
Overall, the complete financial reporting process can be significantly streamlined. How? Automation.
Automated financial reporting enables you to spend less time extracting data and populating reports, and more time reviewing your data to check for anomalies.