Leaders need to pay close attention to theirincome statement, or “natural P&L,” the cornerstone for managing any organization.
Every organization is unique, so every statement needs to vary slightly, but what all good management reports have in common are characteristics that make them useful. These traits include:
- One page! If it doesn’t fit, using normal font and paper size, redesign it.
- Decision-enabling line items. Split expenses into line items in such a way that if it shows a problem, it suggests a solution.
- Intuitive organization. Dollar amounts should be digestible, ordering of items logical. Never present line items in alphabetical order. Do it by function. Make it meaningful for all users.
- Plain English. Clear and accurate. Avoid acronyms, abbreviations and jargon. They exist only to make people feel important. Your people should feel important already.
- Consistency. The statement should correspond with the numbers in your accounting system, or explain why it doesn’t, for accuracy. It should have a consistent look-and-feel, and create a common reference point for people in your organization.
— Adapted from Painting with Numbers, Randall Bolten, John Wiley & Sons.