Investors prefer communication about what’s happening at the company, both the good and the bad, and a monthly report about what is going well and what is not signals an orientation towards transparency, which in turn creates trust between the founder and the company.
The board of directors in any organization is responsible for its operational, strategic, and financial performance, as well as its conduct. It is worth remembering that boards require both financial and non-financial information.
We suggest a short and crisp email communication for monthly board summary along with Financial Reports and a detailed board report followed by a meeting once a quarter.
You can use download our monthly board reporting template here.
Given below are key points you can cover in your board report.
1. Highlights for the Month:
You should highlight any major milestones achieved during the month in this section. This may include booking a new sale/order or winning a strategic client. A good report should contain all the information necessary to facilitate decision-making at the board level. It should lead directors to ask the right questions and initiate a chain of actions that will enhance the ability of the enterprise to achieve its short- and long-term aims and create sustainable shareholder value
2. Financial Results:
This should include data such as current month financials performance vs budget/prior year, review of financial forecast for the entire year, sales gap and pipeline review, financial results by Strategic Business Unit (SBU), etc.
Below can be an indicative list of financial information which needs to be part of the Financial Results section:
Monthly consolidated profit and loss accounts, balance sheets, and cash flow reported against budget
Further breakdown of results by SBU, where they are of a size material to the overall performance of the company;
Quarterly update of forecast results for the trading year
Specific papers on new investment projects above an agreed size
Updates, as appropriate, on major expenditures, such as acquisitions or large building projects
3. Performance Indicators:
Monthly board reports should contain performance information relating to key operational issues as defined by the board: the critical success factors (CSFs) and key performance indicators (KPIs). The board and management should agree on the high-level KPIs to be covered in the report. Management should be able to drill down from high-level indicators to examine the underlying cause of a problem and identify appropriate action.
The board and management should agree on the high-level KPIs to be covered in the report. These should:
draw together and integrate management information;
reflect the critical success factors of the organization and provide a high-level aggregate overview;
be part of a normal business routine;
be comprehensive;
provide a reliable and easy-to-use base through which to provide information that the board finds meaningful;
be appropriate to a challenging management environment and be reviewed regularly.
Check our detailed blog on how to set KPIs for your organization.
4. Key Hires:
You should always keep your board informed about the hiring/onboarding of key management personnel or attrition of a key person which might impact the organization. You should also give details about the pending positions to be hired and how critical are they for the future growth of the company.
5. Strategic Projects:
While you are on a growth trajectory, there will be multiple strategic projects eg. fundraise, expansion into new areas, etc. You should ideally give a monthly update on these to the board.
Some examples are given below :
Implementation of an ERP across the organization;
Expansion in a new geography
6. Updates by Function
Certain boards might be interested in functional performance. It can be R&D or Sales. It is important to identify key performance indicators which explain functional performance. This is very important if your Boards are detailed oriented. You might need to cover each function with its respective milestones. Some examples are given below :
List of projects being handled by R&D Function;
Social media metrics by Marcom Function;
Pipeline Metrics by Sales Function.
The pressure for multi-dimensional reporting is likely to increase further with changes in the business scenario. The scope of information flowing through the company to the board, and then from the board to the investors, will have to be broadened.
Companies need to ensure that they have systems in place that can generate and collect such data, as well as processes and people capable of analyzing and presenting it to the board, and then to the markets, in a meaningful form.
Reports should always be written clearly and simply. Everyday language should be used wherever possible and jargon or acronyms should be avoided. Used judiciously, graphs and charts can be effective communication mediums for key indicators. They also enable trends to be identified more easily.