Do you use data visualisation to help clients understand their “figures”?

Let’s face it - a set of accounts can be quite boring (for some) and also row upon row and columns of figures can often be both confusing and meaningless to many. As accountants, we all love figures (and hopefully(!) can make sense of them and interpret them).

The bottom-line profit (or loss!) is one key figure, but the clients often does not understand why there is no money. One reason is they have probably spent it all during the year – conveniently forgotten about.

An additional report – a funds flow statement (or source and application of funds as it used to be known some years ago) can help to explain. In simple terms – where has the money come from and where has it gone? But again, this is a further series of figures, and yet another page in the accounts.

Data presented in a graphical or pictorial form can often help people – after all “a picture paints a thousand words”.

There are various reporting tools available which can automate the process, or you can create them in Excel or other spreadsheet products, and manually populate them. The latter does run the risk of accounts being updated and forgetting to update the graphs or charts afterwards, whereas the automated ones only make sense if the underlying figures are also “sensible”.

Five-year trends of turnover and profit can be quite useful, and a funds flow graph can also help understand the figures.

A recent addition to Excel is a waterfall chart. This shows a running total as values are added or subtracted. It's useful for understanding how an initial value (for example, net income) is affected by a series of positive and negative values.

The columns are colour coded so you can quickly tell positive from negative numbers. The initial and the final value columns often start on the horizontal axis while the intermediate values are floating columns. Because of this "look", waterfall charts are also called bridge charts.

Sample

However, this, and some other charts and graphs appear to be only supported in Excel 2016 and later versions. I had created one in Office 365, but in trying to use the Excel model in Office 2013, a message appeared to the effect that this type is not supported!

A particular “problem” may however arise – and the above is a classic example of “Deuteranopia”– red green colour blindness. This is apparently found in 6% of the male population. There are however other combinations of colours which also present problems to some.

Do you provide graphs etc as a matter of course, and if so, what do you show on them?

Do you prefer internally constructed models e.g. Excel, or do you prefer to use any of the third-party add-ons?

And do you actually consider the colours used?

Anonymous
  • Hi Kevin - great article: you make some very important points. This is an area where I have long felt that many accountants could improve the service they provide to their clients. It is also an area that we have covered quite extensively over at the Excel Community - just search for chart. There is a big difference between creating a chart and creating the right chart. Edward Tufte's books are a good place to start, for example: The Visual Display of Quantitative Information.

    Over the last few years, the range of visualisations available in Excel or in Power BI desktop has increased greatly and every accountant now has the ability to make data visualisations interactive and to animate them. A whole new world of excitement awaits!