What Is Up with All That Data?!

August 2006

I teach non-financial folks how to read financial information. So, as part of my course, I ask to see a few of the company’s financial reports so we can go over them in class. And more often than not, I am stumped by what I see.

Nine out of ten times, accountants and finance folks report massive quantities of meaningless data on a monthly basis. Thanks for sharing, guys!

Rows and rows and column after column of tiny numbers that don’t help decision makers make decisions. More often than not, this data dump on an Excel spreadsheet obscures the important numbers and turns off the reader.

Why do accountants do this? What are they thinking?

I know, from talking to accountants about how to create user-friendly financial reports—and as an accountant myself, why they do this. Here is a quick run down of their reasoning:

• If I don’t share all of the data, I may get criticized for not being (pick one or all)
• Thorough
• Honest
• Up front
• Open
• One of my users wants this much detail. They hound me about every micro-detail. If I’m gonna create it for one guy, I might as well give it to everyone.
• They guy before me created this report and I just enhanced it… I added a few more columns and rows.
• This is what my general ledger software spits out with a push of a button. It takes too long to customize the report.
• If they don’t understand all of this data, they would tell me.
• I have explained these reports to them at least a dozen times. Every time I do, their eyes glaze over. They just don’t care and I don’t care either.

 Don’t put up with lengthy, meaningless reports

Managers, it is time to stop being a victim of these crazy data dumps and start asking for information you can use. Financial information can actually help you in your work—but you have to be able to read it first.

So I suggest you have a face-to-face meeting with your resident finance/accounting person and discuss the following:

• What financial information you need to do your job
• When you need this information
• How often the accountant is willing to generate the information for you
• Whether the information can be converted to an easy-to-read graphic
• How you would like the information delivered:
• Hard copy
• Email
• Electronic files accessible by you in real time

Suggest that the accountant/finance person:

• Keep the number of rows and columns to four each
• Highlight key numbers or metrics
• Use graphics
• Keep reports to two or fewer pages
• Interpret, not just report, financial information
• Suggest methods for making improvements

You may have to reassure them that you are not going to think badly of them… you aren’t going to accuse them of being slipshod or unprofessional… if they give you a summary of key financial information.

It’s not you

If you are intimidated by the amount of information the accountant is throwing at you, it isn’t because you are stupid. It is because the accountant is not doing a good job designing a report that is useful to you.

What makes someone a fabulous accountant—attention to detail and high analytical skills—doesn’t make them a good communicator, teacher, or marketer. You may be taking them way out of their comfort zone.

Ask them to design reports that matter to you and ask them to teach you how to read them if necessary. Go ahead—ask them for it. It will be good for both of you.