Consistency is Key: creating reports stakeholders can rely on

According to IFRS, reporting is the process of preparing and presenting financial information in a consistent, transparent, and comparable way, using a common language to help users make informed decisions about a company’s performance and position.

Companies of all sizes and stages benefit from a strong reporting process. When people know what’s happening (the unedited reality!), they can respond effectively, avoiding surprises and staying ready for opportunities. In the early stages, reporting can be handled adequately by top management. As the company grows, it’s best to involve Data, Ops, and Finance teams to strengthen the process.

To build an effective reporting system, teams can draw from established accounting principles and best practices to keep stakeholders engaged and informed about the past, present and future. Below are some key characteristics to consider when designing a reporting process (this list is not exhaustive):

Consistency: being consistent means not only to report in a periodic manner but also to avoid changes on previously reported data (even worse when not informed) and the definitions being used (for example: if a company was recognising its revenue as a one-off and changes to a periodic recognition). Additionally, the data points/ KPIs reported should be consistent (additional inclusions are welcomed but exclusions should be discussed with stakeholders).

Conservatism: companies ideally should consider certain expenses when there is an expectation that those will be incurred whilst revenue should only be recognised when properly invoiced (or even when cash is received, to avoid having to recognise bad debt expense in the future). By adopting this strategy, companies can have a better view on certain key metrics, such as runway. 

Materiality: under this principle, companies are encouraged to record all financial transactions that impact the business (and, ultimately, business decisions), regardless of the volume. This is particularly helpful for companies with cash constraints and for companies that are audited. 

Reliability/Objectivity: the data reported should be reliable - this is imperative for proper decision-making. In order to do it, data sources must be verified (and verifiable) and the information flow should be internally audited to ensure that nothing is being missed or manipulated. Reporting should remain objective, leaving no room for subjective interpretation.

Time period: this focuses on the periodicity of reported data and can be different depending on what is being disclosed. For internal usage, there are KPIs that should be reported on a daily basis for decision-making (ie, B2C sales), others would be weekly, monthly, quarterly, yearly. This is particularly helpful for comparison purposes.

By applying the principles above, companies can build a reporting process that’s both reliable and valuable. Involve stakeholders early to agree on the right KPIs (which should vary depending on stage and business model but would usually contain revenue, gross margin, EBITDA, cash position, runway, headcount and others), and regularly compare results to prior periods and forecasts—this creates clarity and drives informed decision-making.