A Step-by-Step Guide to Using Custom Financial Reporting for Your Business Success

In today’s competitive business landscape, it is essential for companies to have a clear understanding of their financial performance. One of the most powerful tools in this regard is custom financial reporting. You can gain valuable insights into your business operations and make informed decisions to drive success. 

In this guide, we’ll discuss how custom financial reporting can help you make strategic decisions about your products and services.

It Starts With Basic Financial Reporting

Financial reporting starts by summarizing a business’s financial status and operations. The foundation of financial reporting lies in its primary documents: the income statement, the balance sheet, and the cash flow statement. Each of these reports serves a distinctive purpose, painting a comprehensive picture of the financial health and trajectory of a company for stakeholders. 

Customized financial reports go deeper than just monthly numbers. They can examine how each of your products and services improve or become a detriment to your cash flow and strategy planning. You’ll get a relevant and dynamic report that shows you how your products and services affect your monthly financial statements.

Identify the Key Performance Indicators (KPIs) of Your Products and Services

Knowing what key performance indicators (KPIs) to follow is a critical preliminary step to creating a custom financial report for select products and services. These indicators represent the metrics that are most pivotal to your company’s success and can significantly vary across different industries and individual business models. KPIs might include metrics such as new product sales, existing product sales, cash conversion cycle, return on equity, customer lifetime value, churn, and lead time, among others. 

Metrics like net promoter score (NPS) and customer satisfaction scores (CSAT) would be relevant KPIs to measure, too. Although not specifically related to financials, these metrics would help assess customer perception and loyalty when it comes to your products or services. 

Next, you’ll need to way to track and analyze KPIs accurately. It’s important to remember that while having numerous KPIs can seem beneficial, too many can dilute focus and resources. Aim for a balanced set that covers the products and services themselves but also how they drive business growth. 

Also, don’t forget to set benchmarks. What price point or sales volume do you need to turn a higher percentage profit? When does a new product line break even?  

The Importance of Custom Financial Reporting

Custom financial reporting offers a nuanced analysis of financial performance. Unlike generic financial reports, which provide a broad overview, custom reports hone in on the specific areas crucial to your strategic goals. You’ll see the value of your product lines, customer demographics, or even geographic and regional performance.

Custom financial reporting is ideal for flexibility and relevance to your exact business model. For instance, if your business operates across multiple sectors or has a diverse range of products, a one-size-fits-all report may obscure valuable insights into segment-specific performance. By contrast, custom reports can isolate and analyze these segments individually, offering clear visibility into their profitability and growth potential. You could identify hidden opportunities or underperforming areas that might be overlooked in more generalized financial statements.

Custom financial reporting facilitates proactive decision-making based on individual product lines. This immediacy and specificity make it possible to swiftly react to emerging trends. For example, if you find a raw material that works better in a particular product, you can alter the price while also marketing this new formulation or material as higher quality or a new advancement.

Another advantage of custom financial reports is that they allow you to make decisions based on specific KPIs on a product level rather than a holistic one. Imagine a report that could tell you exactly how much to alter a product’s composition, individual size, batch size, or price in order to achieve a certain financial goal.

Custom Financial Reporting System Is One Half of This Journey

Yes, there are robust analytics tools out there that can help you craft custom financial reporting. These software platforms often come with a range of features that can be tailored to your specific needs, such as dashboards, analytics, and automated report generation. Choosing a solution that integrates seamlessly with your existing systems and data sources is crucial to ensure a smooth implementation process.

But what are the next steps? What insights can you derive from the reports you see? The other half of custom financial reporting is having an expert by your side to give you keen insights about how to move forward. Analyzing your custom reports can identify the top performers and how to best utilize them.

Contact the Business Advisors at The Whitlock Co.

The team at The Whitlock Co. offers your business the expertise and insights to help you make strategic, relevant decisions about your company’s products and services. We can provide guidance on best practices while identifying ways to adapt to changing KPIs

Contact The Whitlock Co. today to request a consultation.


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