Management Reporting: What Is It, Best Practices & More

For those who run businesses, tracking KPIs and making sense of your numbers can require a ton of work, but when developing a robust management report, the effort is always outweighed by the results.  

Understanding how your business is tracked through management reporting can help you gain more control over your business. Staying close to your key business metrics will help you create plans so you can navigate your business into future territory.  

In our ultimate guide to management reporting, we'll cover everything you need to know, including the types of management reports at your disposal, why management reporting is essential for future decision-making, how to create a management report for your business and why management reporting software, such as Fathom, is a vital tool to for efficiency and effective, higher quality reports.  

What is management reporting?  

Management reporting is a type of business intelligence presented to management-level staff within your organisation.  

The process of creating a management report often involves employees consolidating and analysing data from different sources and using it to make a detailed, clear overview of business performance, which, once complete, they then submit to their managers.  

Management reporting is an integral component of business operations because it helps businesses measure their performance guided by specific key performance indicators (KPIs) and compare their performance against their nearest competition.  

All aspects of a management report can be decided upon internally, such as deadlines and timeframes, content inclusions and report length, and the format in which they're delivered. As management reports contain financial and proprietary information, they are confidential documents for use internally only.  

Presenting management reports to your business leaders can showcase areas within your business that need to be improved upon and highlight patterns and trends so sound conclusions can be made quickly. From here, leaders have a clear picture of the business's health, and critical operational and strategic business decisions can be made based on the performance insights contained within the report. (Learn more about what is financial analysis.)

Essential types of management reports  

There are some types of management reporting you could present to your senior executives to show how each division is meeting KPIs for the month, quarter or year.  

The following management reports are essential in driving your business forward:  

Analytical reports  

Analytical managerial reporting involves examining and assessing the effectiveness of your business strategies.  

During the process of collating data for the report, business divisions can present quantitative data to crunch the numbers and qualitative data as a way of explaining the reasoning and logic.  

Implementing analytical reports within your business can lead to improved innovation and constructive, strategic decisions.

Internal reports  

An internal report is typically prepared within a business to relay the performance of plans or projects within business departments.  

Internal reports can effectively track the progress or status of activities assigned to team members, measuring how productive business workflows are.  

Operational reports  

Operational reports monitor the performance of different business metrics with various intentions, such as:  

  • Optimising business performance,  
  • Identifying trends,  
  • Minimising costs, and  
  • Improving day-to-day operations.  

Operational reports can help uncover efficiencies and inefficiencies within your business and are often created at monthly, quarterly and yearly intervals.  

Suppose you're looking to create a management report and need help figuring out where to start. In that case, Fathom has sample reports that you can use as inspiration for visually appealing, comprehensive management reporting.  

Why are management reports important?  

The importance of management reporting must be considered, as it is critical to understanding the factors that may be impacting how your business functions.  

Management reporting can help business leaders to have a better understanding of KPIs and be able to set goals around performance.  

Management reports are vital to decision-makers within your business as they'll be able to draw conclusions based on sound, accurate data insights quickly, and this will help them to make smarter decisions about the business.  

Driving necessary changes within your business, management reporting can influence the formulation of strategies that aim to improve your performance, efficiency, profitability and growth.  

What are the benefits of frequent management reporting?  

A management report is an analytical tool to assist managers and business leaders in assessing the performance of many aspects of the business.  

Management reporting contains many benefits for business advisors, management-level staff and CFOs, including:  

  • Providing business leaders with the data and insights they need to make strategic and operational decisions.  
  • Leaders can use the reports to understand the overall health of their business, which can help them to prevent unnecessary losses or expenses.  
  • Supporting leaders in your business to understand top KPIs and use these to set performance goals.  
  • Serving as a means of communication within your business, enabling divisions and teams to come together in the collective sharing of information and working towards common business performance goals.  
  • Improving collaboration between business divisions, with everyone working together with a common objective.  
  • Encouraging continual business growth and ensuring a prosperous long-term future.  

What makes an effective management report?  

Effective reporting can be a powerful tool in driving improvement within your business.  

For effective reports that give business leaders everything they need to see, it should include the following:  

  • Your objectives: Communicate the goal of management reporting within your organisation and how the report contributes to it.  
  • Your measurements: Utilising KPIs as a metric for success so far and explaining the goals the business is striving for.  
  • Be clear with your narrative: Ask yourself, what do my managers need to do with this information? Developing your management report with this question will help you get to the point quicker and keep the information tight.  
  • Visualising your data: Using visualisation techniques in your management reports to tell an engaging story. These techniques may include charts and graphs that communicate results quickly to business leaders.  
  • Include recommendations: Include an action plan or recommendations within your management report based on the insights you've included. Your business management can use these pointers to determine what steps they'll need to take next.  
  • Integrate the report with technology: Leverage management reporting software to streamline the process of creating your report, removing the need for repetitive manual intervention and assuring the accuracy of your data.  

Check out our webinar to dig deeper into building an effective custom management report with Fathom.

How to create a management report  

Although there isn't a one-size-fits-all management reporting process, there is a series of steps you should follow in gathering, analysing and presenting your business data in the form of a management report.  

The management report you produce after following these steps will help leaders make some forward-thinking calls about what trajectory your business will be taking.  

Here are some of the key steps in the management reporting processes you can follow:  

Identifying your reporting objectives  

Start with setting the specific strategic goals you're trying to achieve through your management reporting, and understanding what results you will be looking for.  

You'll also need to set measurable KPIs to benchmark your business success in alignment with overall company goals.  

Collecting your data  

The next step is collecting the necessary information to track your success and progress towards achieving those goals. Focus on picking the sources of data you need to tell the big picture.  

Management reporting systems are a valuable tool in this instance, as they'll allow you to automatically connect all your data sources with the click of a button. More on this later!  

Determining how your report will be presented  

There are a few points to this. You'll need to think critically about your management report's overall structure and content. What does your business leadership need to know? What do they need to do with the information contained within your report?  

Here are some essential elements that should be contained within your report:  

  • Start with your reporting objectives.  
  • Document trends in KPI performance.  
  • Add a section on current KPI performance metrics.  
  • Create an at-a-glance analysis of the business performance based on the data obtained from your accounting software
  • Include a consolidated financial report
  • Make recommendations on action items for your business leaders to consider, including a cash flow forecast to help with business planning (learn more about what is cash flow forecasting)

Now you've built up some hard data, you'll need to tell the story so its intended audience can easily understand it. Contextualising this data with a narrative backed by a comprehensive dashboard will be the best way to convey your insights.  

Additionally, you must think about the right visuals to engage your business leaders. A simple graph or bar chart with the help of a management reporting system can be an engaging way to communicate your findings.  

Distributing or presenting your report to managers  

Once your management report has been distributed or presented to business leaders, they can digest the results, go away and outline their next steps and create action items to move the needle forward.  

It is always important to encourage a culture where data is at the heart of your business, and a management report can help empower leaders within your business to embrace the power of business data, and this will highlight the value of your efforts.  

The management reporting process should always be dynamic and iterative, with the information and insights gathered by the report feeding into your ongoing planning and decision-making.

Best practices for management reporting  

Management reporting best practices can help you to enhance the quality of your reports. A well-crafted report that maximises its impact can make all the difference to how your managers respond and, subsequently, how informed and strategic their recommendations will be.  

Following these management reporting best practices can include:  

  • Understanding your management reporting goals,  
  • Use data to tell the story to your business leaders,  
  • Ensuring that you have relevant KPIs to track your business goals,  
  • Using management reporting software to simplify and automate your tasks,  
  • Making reports visually engaging so it is easy for managers to interpret.  

What's the difference between a management report and a financial report?  

There are many key differences between a management report and a financial report.  

A financial report is a retrospective look into your financial performance over the last few weeks, months or years. Financial reports consist of your financial data within a profit and loss statement, balance sheet and cash flow statement. These high-level external reports are a legal requirement that creates a broad snapshot of your business's financial health. Financial management reports are often presented for external use to banks, other lenders and investors.  

On the other hand, a management report is an estimation of your business's future financial performance and focuses on both your financial and operational performance. Unlike a financial report, which is primarily created for external stakeholders, a management report is a non-mandatory document that is prepared for internal usage only and is aimed at management-level staff members.  

What is management reporting software?  

Management reporting software (a management reporting system) can cut out the time spent assembling management reports manually.  

A management reporting system connects directly with your business data sources, unlocking the power of automation so you can focus on data analysis and provide valuable insights to your business leaders.  

Having a management reporting solution can take away the effort of repetitive, manual tasks at risk of human errors, so you can share business results in a clear, compelling way using accurate real-time data.  

The beauty of this is that reports can be presented even when you're not sitting face-to-face with your business managers. Please read our article, presenting Fathom's interactive management reports remotely, for more information on how you can create visually engaging, up-to-the-minute PDF reports and deliver them remotely.

What should successful management reporting software include?  

A leading management reporting system should contain best-in-class features to make your life easier.  

Fathom's features are designed to put your management reporting on autopilot:  

  • The power of automation to schedule the creation and issue of timely management reports.  
  • A simple-to-use report editor so you don't need to create reports from scratch every time.  
  • A content library of ready-to-use charts, tables and financial statements.  
  • Beautiful visualised insights through personalised reports that can be read on any device online, including delivery straight to your inbox with a click of a button or offline in print.  
  • The ability to add commentary to tell a story or call out important information.  
  • A presentation mode so you can effortlessly share reports in face-to-face and virtual meetings.  

Learn more about Fathom's management reporting software, which is trusted by over 75,000 businesses worldwide.  

Looking for software that makes management reporting simple?  

Fathom is great management reporting, simplified. Business advisors, CFOs and business managers alike rely on Fathom's fast, visual and flexible capabilities for their management reporting needs.  

Start your free 14-day trial with Fathom today, completely credit-card-free, and experience our powerfully simple management reporting software for yourself.  

Frequently asked questions about management reporting

What is management reporting?
Management reporting includes a set of reports that are designed for your business’s managers.  

Management reporting can help your managers to spot trends, track the performance of your business, analyse your KPIs and better align your performance to your goals.
What are the main components of a management report?
The main components of a management report include:
1. Collating your sources of data
2. Defining the audience in your business and what they will want to see
3. Identifying and confirming the KPI’s to be used
4. Using management reporting software to visualise your data
5. Creating your management report
What is the difference between management reporting and financial reporting?
There are many key differences between management reporting and financial reporting.  

A management report is:
Prepared for internal stakeholders, such as business leadership For internal use only An optional document  Focused on tracking the financial and operational performance of your business to make predictions about the future.  A financial report is: Prepared for banks, other lenders and investors For external stakeholders A mandatory, legal requirement Focused on your business’s past financial performance only.
Why is management reporting important for businesses?
Management reporting can provide accessible insights to your business leaders so that they understand its’ current financial health, help to identify areas that may require attention and ultimately, make informed decisions on the business’s strategy and operations.
How often should management reports be generated?
Management reports should be delivered in regular and timely intervals, such as monthly, quarterly or yearly.  

Ultimately, how often a management report should be generated relies on the expectations within your organisation, which will be based on a variety of factors, such as your business size and industry, your business goals and the main objectives of the report.
What are key performance indicators (KPIs) in management reporting?
Management reporting brings into focus the importance of staying on top of your Key Performance Indicators (KPIs).  

KPIs are a type of quantifiable performance measurements that help your business to gauge its success against a set of objectives or targets.  

When management reporting sheds light on how KPIs are tracked over time, business leaders can fold their performance into strategic and operational planning.
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