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The Management P&L is the one report that is essential for the effective management of any organization.  Unlike the financial statements required by GAAP, there are no set rules for how a Management P&L should look – the optimum report design is unique to each organization.  This course reviews the design criteria that are common to all well-designed Management P&Ls, discusses how a well-designed Management P&L can help create a common language throughout the organization, and identifies the tactical issues that must be addressed in order to implement a Management P&L. 

Intro Video Transcript

Randall Bolten: Hi, my name is Randall Bolten and I'm the instructor for the course, Designing a Great Management P&L. This course is part of Illumeo learning Training series.

Let me introduce myself briefly. First of all, as I said, my name is Randall Bolten, and my professional background is that for 30 years I was a finance executive in Silicon Valley, mostly for software companies, both public and private companies. And for almost 20 of those years I was a Chief Financial Officer. More recently and based on my experience as a finance executive I wrote a book called, "Painting with Numbers: Presenting Financials and Other Numbers So People Will Understand You." I believe it's the first book to treat presenting quantitative information as a communication skill not as a math or computation skill. And this topic, Designing a Management P&L, fits right into that concept.

Let's take a look at the agenda for this course. We'll start with a brief introduction, what is a management P&L, why is it so important, and what are some of the key thoughts I want you to have in mind as you go through the course?

We'll talk about the rows, the things that go down the left side of any financial statement and identify eight essential design criteria that affect how you lay out the rows of a management P&L. We'll also look at what goes across the top, the columns, and give you a perspective on how to make decisions in that area. We'll have a few more thoughts about the implementation of a management P&L and then we'll wrap it up. So let's start.

What is the Management P&L? It has many names, it's also known as the "Management Income Statement", the "Natural P&L", the "Departmental P&L", the "Departmental Income Statement". A whole lot of different names but they're all fundamentally the same report. And what they're intended to do is present to managers the revenues and expenses by their natural categories. Let's talk a little but about ... by natural category it means, "What they mean in a business sense."

For a software company which is the industry that I'm most experienced in, for example, you might want to distinguish on the revenue side between product sales and maintenance revenues. In the cost of goods area between raw materials and direct labor. And in the operating expenses area between categories of expenses like salaries, benefits, and travel and entertainment. I've said, "I think it's the single most important report that any enterprise uses." So let's talk about why that's so important.

Well, you can't manage an enterprise without it. That's true regardless of what industry the enterprise is in, whether it's for profit, not for profit, whether it makes something, or sells a service. This one report is likely to be used by every manager in the enterprise. Which means that it gets a lot of visibility throughout the company. That's a good thing if you're in financial planning and analysis or in accounting because it gives you an opportunity to create a common language for the enterprise to use in the ways that you talk about your business.

It's the same report company wide, hence the notion of a common language. And company wide I mean top to bottom, from line managers all the way up to the board of directors and side to side across all functional areas, G&A, manufacturing, sales, marketing, you name it. The key design thoughts that I want you to have in mind as we walk through the details of this course are designing a good report. A good management P&L is about communication. That means that Job 1 means the report must be understandable and usable, which, by the way, is also Job 2 and Job 3.

No one is going to send you a thank you note just for getting the numbers right. That means you'll get to collect your paycheck next pay period. What's important is to produce a report that helps people manage an enterprise. Remember, most of the users are not going to be finance professionals. That means you have to be very careful about designing reports that can't be understood only by your fellow finance professionals.

They're also not going to want to devote much time to pondering and analyzing the report. You need to design the report in a way that the important information jumps right out. And lastly, as I've said before, the design principles that we're going to talk about apply regardless of what your enterprise does. In the next portion of this course we'll get down into the details.

Learning Objectives

  • Apply the universal design criteria essential for an effective Management P&L in any organization
  • Design a Management P&L that addresses your organization’s specific management issues and concerns
  • Design a report that can help create a common language throughout the organization
  • Build the Management P&L fits into your organization’s entire portfolio of financial statements and reports
Last updated/reviewed: April 04, 2018

31 Reviews (116 ratings)Reviews

5
Member's Profile
This course tackles an issue near and dear to my heart: making financials make sense to the audience at hand. Too many finance and accounting folks are dogmatic about GAAP, and then wonder why their board or their internal business partners stare blankly at financial reports and wonder what it means to them or the company. Really good finance and accounting folks make the numbers tell a story, and that definitely means using certain measures and formats that have meaning for the recipient, above and beyond GAAP. This course does a great job of giving you that perspective that it's the story and the actions one could/should take as an outcome of that number story that matter. The instructor walks you through a pretty thorough example as he goes so the concepts can take shape through the example. Very useful.
3
I don't believe a P&L can always fit on a single page and that this concept is an absolute. It's a great idea, but as your content clearly said, you need to put decisionable information on separate rows. Learning to compact similar COA lines then becomes an art. But alas, as you also said, some managers will require other detail, so while you may achieve this 1 page P&L, you are probably going to have multiple reports anyway. In addition, Column content can change dramatically depending on the type of P&L provided (monthly, quarterly, comparative, comparative w/budget, historical). Here I would agree that one should have all columns on one page (even if its in landscape orientation). Maybe the approach should have been lest is best, clarity should be king.
5
Anonymous Author
Great example of Less is MORE. Sr. executives are busy, "simple" and "decision-focused" are the key to get Sr. executives' time. Coming from large high-tech corporations and having presented to Sr. mgmt throughout my career, I totally agree Mr. Bolten's one-page recommendation. If can't fit into one page, most of time is because presenters haven't drilled down deep enough and couldn't articulate the key issues. My experience is, if one has to present pages mgmt report, 2nd, 3rd pages won't get attention anyway.
4
Anonymous Author
Great course. The materials stressed that the users of the report need to understand and be able to use the information in the report. It is better to focus more on presenting the proper information than spending all of your efforts getting precise numbers and/or presenting ratios, etc. that the users cannot understand. This is a key lesson for all presenters of financial information.
4
Member's Profile
This course was very helpful. I think It would be good to add other companies examples (e.g. Apparel, Food, etc) and also to add other formats of the Operating Expenses (by location, by expense nature, by department) so It would fit everyone needs.
4
Member's Profile
a great course for someone who is new to management reporting or has less than 3 years of management reporting. Randall does a good job explaining what I consider basic concepts after being in FP&A for 20 years. Very foundational.
5
Member's Profile
There is a multi-point important message in this webinar that should not be missed. Clarity, simplicity, consistency, just to mention a few. Watch it as it is important to know this angle on Financial Statements.
4
Member's Profile
I wish the author had used a different SIC code than sw. One more representative of US economy; e.g., bigger COGS expenditures that would require rows in the P/L
5
Anonymous Author
The layouts and the thoughts behind them make a lot of sense. I particularly liked the different column layouts depending on the user/audience for the reports.
4
Anonymous Author
Being experienced in providing Management P&Ls, I was hoping for some new ideas which I did not get. This was more of a reinforcement of what I already knew.
3
Anonymous Author
The content was very good! But there were a lot of audio issues. Weird ambient noises throughout the entire recording that were very distracting.
5
Member's Profile
Well done. Key points were all good take aways. I found the most value in slide 31 with the sample formats and to whom each format is suited.
4
Anonymous Author
Basic overview of how to develop a management P & L. Informative for beginners, as indicated in the course description.
4
Anonymous Author
Very informative and a step away from the customary GAAP outlook. It is a very good tool for managers
5
Member's Profile
Mr Bolten provides a lot of implication to a great management. It was a great move to practical work.
5
Anonymous Author
I found this very useful for someone who is just beginning to produce reports for management!
4
Member's Profile
Enjoyed this course and will use the lessons learned in this on our Product P&Ls, thank you!
3
Member's Profile
It's a good course. However, I think it could have been better.
5
Anonymous Author
Very thorough speaker on describing importance of P&L reports.
4
Member's Profile
Great information for accounting staffs who support local mgt
4
Member's Profile
A common-sense approach to meaningful financial reporting.
5
Member's Profile
Thanks for this course Mr. Bolten, you were a huge help!
5
Member's Profile
Great course! Very informative and helpful.
3
Anonymous Author
Useful Review: cover the basics.
5
Anonymous Author
informative and well presented
3
Anonymous Author
it was ok. some good points.
4
Member's Profile
Good coverage on the basics.
5
Anonymous Author
Was good to be able to recap
4
Member's Profile
Definitely helpful concepts
5
Member's Profile
Useful information
5
Anonymous Author
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Prerequisites

Course Complexity: Intermediate

Prerequisite: Exposure to corporate accounting and reporting

 

Advanced Preparation: None

 

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION and Overview
DESIGN CRITERIA
  11:51Design Criteria #1 (One page!) and #2 (Decision-Focused)
  8:45Design Criteria #3 (Appropriate $$ Amounts) and #4 (Intuitive Organization)
  8:23Design Criteria #5 (Consistent Look-and-Feel), #6 (Understandable Categories, and #7 (Plain English)
  5:11Design Criterion #8 (Tie to Accounting System)
MANAGEMENT & IMPLEMENTATION
  6:38Column Layout for Management P&L
  5:40Thoughts about Implementation; Wrap-Up
Continuous Play
  53:19Designing a Great Management P&L
SUPPORTING MATERIALS
  PDFDesigning a Great Management P&L Glossary/Index
  PDFSlides: Designing a Great Management P&L
REVIEW & TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM