A financial dashboard is a flexible business intelligence tool that aids in streamlining the functioning of your company.
Similar to a dashboard in a car, a financial dashboard allows you to view important information at a glance through intuitive data visualization. Instead of monitoring speed and gas on a joyride, you're viewing key metrics like customer acquisition cost and gross profit margin.
The best financial dashboards allow you to "drill down" into KPIs and gain insights. Dashboards help synthesize disparate financial and accounting data into a cohesive, easily understandable format, empowering you to make informed decisions.
However, not all finance dashboards are the same.
Beyond there being different types of dashboards that focus on different metrics (e.g., dashboards that look solely at cash flow or profit and loss), not all dashboards are designed well.
Let's review some of the primary types of dashboards, the metrics they contain, and step-by-step instructions for building them so they're as effective as possible.
From defining objectives and selecting key metrics to designing visualizations and ensuring data accuracy, these steps will guide you in building a financial dashboard that delivers valuable insights and supports informed decision-making.
As we mentioned previously, not all dashboards are the same—different dashboards focus on different metrics and cater to different target audiences.
Before you start building your dashboard, determine its objectives and identify the target audience. Understand what key metrics, insights, and visualizations are most relevant to the stakeholders who will be using the dashboard. Then, select the most important financial and non-financial KPIs that align with your organization's goals and objectives.
Here are some examples of different financial dashboards, their target audiences, and the KPIs they prioritize:
Today's CFO is a strategic partner to the CEO, helping direct company policy.
However, CFOs need quick access to heaps of information to make informed decisions. This is where CFO financial dashboards come into play.
While not everything can be included in a dashboard, the CFO must have a bird's eye view of the company's financial situation.
Certain metrics need to be prioritized to facilitate this, and they are:
The profit and loss (P&L) dashboard provides a high-level view of the company's income and expenses. Any solid P&L dashboard should include the following metrics:
Sticking with the car metaphor, cash is the fuel of your business—which is why the cash flow dashboard is one of the most important.
The cash flow dashboard helps translate the cash flow statement visually. It should include the following:
Gathering and organizing data for financial dashboards involves selecting data sources, collecting and validating data, preparing it for visualization, and implementing appropriate data governance and security measures. This ensures that the data within the dashboard is accurate, accessible, and up-to-date, enabling stakeholders to derive valuable insights and drive informed decision-making.
Select a dashboard design and visualization tool that suits your needs and expertise. Consider factors such as ease of use, data connectivity, interactivity, and visualization capabilities.
Create a logical and user-friendly layout for your dashboard. Organize the visualizations, charts, and graphs in a way that supports easy navigation and comprehension. Group related metrics together and ensure that the most important information is prominently displayed.
Choose the most appropriate visualizations to represent your data. Bar charts, line graphs, pie charts, and gauges are common options for financial dashboards. Consider the nature of the data and the insights you want to convey when selecting the appropriate visual representation.
Incorporate filters and interactivity to allow users to customize the dashboard based on their specific needs. This can include date ranges, product lines, geographic regions, or other relevant dimensions. Interactive features enhance user engagement and facilitate deeper data exploration.
Regularly verify the accuracy and integrity of the data presented on the dashboard. Establish processes to ensure that data is updated in a timely manner, whether through automated connections or manual data refreshes. Real-time or near real-time updates provide the most up-to-date insights.
Conduct thorough testing of the dashboard to ensure that it functions correctly and meets user expectations. Seek feedback from stakeholders and make necessary adjustments to improve usability, clarity, and effectiveness.
Regardless of the type, each financial reporting dashboard has the same general goal: to simplify a complicated situation. You want to be able to see all relevant data at a glance and quickly transform that information into actionable insights.
To do this, your modern financial dashboard needs to connect all these pieces of data, tell a story, and allow a user to drill down and investigate on an ad hoc basis.
Whichever type of dashboard you're creating, be sure to follow some of these best practices:
We all want to include as much information as possible, but that would defeat the purpose of a dashboard. Streamlined, business intelligence dashboards need to be focused and to the point.
The best way to figure out which widgets to include is to determine what questions you want to be able to answer before designing your financial dashboard template. You should also decide who you want to be able to answer these questions, and what metrics will be most relevant to that person or group. One way to find out is to simply sit down with them and ask which KPIs they focus on most frequently.
Keep the dashboard uncluttered by organizing areas of relevant information. Ensure proper alignment and spacing between widgets to make the dashboard visually appealing and balanced. Use consistent margins, padding, and spacing between widgets to maintain a clean, organized appearance.
Use annotations and explanations to clarify the meaning of metrics, abbreviations, or calculations. You can also incorporate additional information like historical data or benchmarks to provide comparisons and insights.
The challenge is to make sure things aren't cluttered when providing this context. One way to do this is with tooltips or pop-ups that appear when hovering over a certain piece of information.
The ability to "drill down" is also critical. You want each piece of financial data to lead to the next, allowing for ad-hoc investigation.
Making the dashboard interactive is one way to facilitate this. Imagine a user clicking on a particular metric, such as total revenue. By clicking on this metric, the user can access a more detailed breakdown of revenue sources, such as product lines, customer segments, or geographical regions.
The five-second rule is the ultimate test of how well-designed your dashboard is.
Can you look at it for five seconds and remember the gist of what it was saying? Will your target audience be able to answer their most frequently asked questions in about five seconds?
For example, let's say you're designing a CFO dashboard. The CFO should be able to ask and answer "What's the company's current cash position?" or "What are our current debt levels?" in no more than five seconds.
Visualization is the key to quickly conveying information in a dashboard.
Which type of presentation you use depends on the information you want to provide. For example, if you want to compare two metrics, such as different categories of spending, you'd use bar charts.
Showing trends over time, like revenue growth, would necessitate line charts, while scatter plots would be useful for showing relationships between two variables (e.g., sales revenue and advertising spend).
A good rule of thumb is to have at least five visualizations. Any more than 10 is starting to push it and can become too cluttered. If you find you have too much information, you might want to consider creating a separate dashboard.
A dashboard needs to have a logical structure, which means grouping related widgets.
Categorize widgets in your own financial dashboards by relevance and similarity. This will make it easier for users to quickly find the financial data they need. You might have a group of widgets related to sales, another group for marketing, and so on.
Present the most important widgets in their own separate space. They should "pop out" of the dashboard, being the most noticeable elements. To make them stand out, assign them a color that contrasts strongly with the background of the dashboard and the other widgets.
Present information in a visual hierarchy, placing the most important information at the top. You can place trends right beneath this top-level information, adding context to those data points.
The most granular details should be at the bottom. This follows the idea of progressive disclosure—the idea that the simplest information should be displayed first, and become more and more detailed as the reader continues.
Another way you can structure your dashboard is by numbering different visualizations. You're telling a story with a dashboard, and that story needs to be in a logical order.
A strong finance dashboard arms stakeholders with the insights needed to make intelligent business decisions. By including each of the above elements in your future finance dashboards, you'll be giving stakeholders exactly what they need to lead the company in the right direction.
Want to simplify the dashboard-making process even further? Contact us today for a free demo to learn how Cube can help you easily access, filter, and visualize data to make better decisions, faster.