Cutting the clutter: Streamlined operations reports engage key stakeholders

Cutting the clutter: Streamlined operations reports engage key stakeholders

Carol Kenner, CPA, CGMA, knew her company’s financial statements
backward and forward. Every number on every page made sense to her.

But not everyone at Solix Inc., the New Jersey company where Kenner
is CFO, knew what the numbers meant. And among the finance staff, not
everyone involved in the creation of those monthly operations reports,
which had grown to 20 pages, considered the process routine.

About a year ago, after a suggestion by a new board member, also a
CPA, Kenner made the move to cut the clutter in the monthly Excel
document that was emailed to the board and about 30 other stakeholders.

Instead of a large, numbers-heavy document, Solix delivers a
streamlined monthly report that cuts to the chase and lessens
confusion for board members and others who aren’t trained in finance.

The number of pages has decreased by about half, but so too has the
number of “important” pages. Now, a few pages of key information in an
easier-to-read format are delivered to inboxes. Instead of calling up
a PDF, seeing it’s 20 pages, and thinking, “I don’t have time for
this,” board members and department heads are more engaged in scanning
over the key numbers in the report.


Solix, a $100 million private company of about 450 employees in
Parsippany, N.J., is a provider of eligibility determination,
qualification program management, and customer-care services to
government agencies and businesses in the United States.

In the past, the operations reports included the most recent month’s
revenue versus budget on one page, the year-to-date revenue versus
budget on another page, and then separate pages for current month
versus previous year’s month and current year to date versus previous
year to date. That’s a lot of flipping back and forth through a
printout or scrolling through the tabs of an Excel document.

Those four pages have been trimmed to two. Now, data for July 2013
actual, July 2013 budgeted, and July 2012 actual can be viewed on one
page, the same for 2013 year to date, 2013 year-to-date budgeted and
2012 year to date.

The consolidated operations report has three key pages after the
consolidated balance sheet. The first is an easier-to-read income
statement. In addition to having rows for revenue, operating profit,
and net income, the statement includes contribution as a percentage of
revenue, and operating profit as a percentage of revenue.

“We’re able to compare both the amount and the volume of the
contribution, in addition to a comparison in percentage,” Kenner said.

The next two pages are for month and year comparative results with
the headline “Operational Results Summary.” They have comparisons to
actual numbers, budgeted numbers, and prior-period numbers.

Those who crave the details can still look at the full report, which
Kenner says has been cut to about 10 pages. For the rest, the first
four pages beyond the cover tend to do the trick.

Solix still creates full annual reports for shareholders and
quarterly reports for its bank. “We’re giving the traditional GAAP
financial statements, with balance sheet, cash flow, P&L,
stockholders’ equity, footnotes,” Kenner said.

The June 2012 report for the board was 20 pages. One from this past
summer was 11 pages.


Less time on the monthly report, more on forward-looking analysis.
The finance staff is “asking more questions about the numbers,” Kenner
said. They’re also happier about the change in emphasis—e.g., the
elimination of one specific segment report that a Solix executive had requested.

“My staff was just thrilled,” she said. “They told me, ‘That
[segment] report was such a pain to create. It’s always got rounding
errors, and you have to cross-reference it to others.’ It was a
nightmare to create. You don’t even know what kind of machinations
they were going through to create these reports. It looked simple, but
they said, ‘No, it’s really awful.’ ”

Greater accuracy. “Any time you free up the time of professionals,
you’re going to get more accuracy,” Kenner said. The finance staff
uses that time to double-check and root out any inconsistencies. “They
go back and ask more questions of the people providing the numbers,”
she said.

Positive feedback from the board. “They’re all good with it,” Kenner
said. “You put too many numbers out there, and they don’t even mean
anything to some people. We hand out a report that’s maybe 12 pages.
On one or two of them, we really encapsulate what we think are the
most important measurements.” More detail follows in subsequent pages.
For instance, if someone wants to know specifics on labor costs or
facilities spending, he or she can dig deeper into the report.

Better comparisons. In the past, Solix compared year-to-date numbers
to budgeted numbers and year to date versus previous year to date.
Now, the comparison on the front page of the monthly operations report
shows the previous metrics as well as that month’s numbers versus
budget and that month versus the previous year’s month. Much of
Solix’s work is seasonal, so focusing on monthly numbers was a more
meaningful comparison.

A smoother review. The more accurate the numbers, and the less
voluminous the document, the better for the year-end audit. Kenner
said the reduction in pages will make the audit process run more
smoothly as well. The finance staff has “more time freed up to make
sure that everything that has flowed through the financials is right,”
she said. “The more you can keep up with that, the better it is for
audit at year end.”


The thought process put to use at Solix can apply to other
companies, and evidence shows a streamlining of documents such as
annual reports is needed. One KPMG study shows companies’ 10-K filings
and disclosure notes growing substantially over the years, in part due
to more regulatory requirements. (See the sidebar, “Five Tips for
Streamlining Annual Reports,” for advice on how to present material
that engages stakeholders.)

For instance, the Form 10-K for Bank of America grew from 160 pages
in 2004 to 245 pages in 2010. Dow Chemical’s 10-K grew from 118 to 203
pages in that same span. Overall, 10-K volume grew 16% among 25
companies tracked by KPMG, and footnote disclosures grew 28%. The KPMG
report said that the volume and complexity of the documents and
disclosure notes made it more difficult for stakeholders to absorb the material.

While Kenner doesn’t have to follow the same reporting guidelines as
a public company CFO, the principle is the same: Smaller and simpler
is better, for the good of everyone.

Neil Amato is a
JofA senior editor. To comment on this
article or to suggest an idea for another article, contact him at or 919-402-2187.

Also watch Kenner discussing how Solix streamlined its financial reports:


Five Tips for Streamlining Annual Reports

The issue of lengthy reports is a global problem, and that is one
reason groups such as the International Integrated Reporting Council
have advocated streamlining annual reports. PwC’s Practical Guide
to IFRS: Streamlining the Annual Report
includes five tips on
how to make annual reports more worthwhile for stakeholders:


JofA article

Option a Game Changer for Private Companies
,” Sept. 2013, page 44


For more information or to make a purchase, go to or call the Institute at 888-777-7077.


Financial Reporting Framework for SMEs


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