Skip to main content

Data & Intelligence

Why Include Exception-Based Reporting in Overall Business Reporting?

Team Of Businesspeople Analyzing Some Reports In A Boardroom

Business losses come in many forms, but they are a constant for most businesses. Many companies struggle to manage losses, whether internal or external. However, exception-based reporting is one tool to help businesses quickly find and eliminate sources of risk and loss. 

Today’s Finance departments are often focused on monthly profit & loss statements with comparison to the prior year or budget.  Utilizing metrics and exception-based reporting can enhance the visibility of performance trends and offer well-directed analysis.   

Exception-Based Reporting

Exception-based reporting is useful across various industries, such as retail, healthcare, manufacturing, and wholesale distribution. The primary goal of this concept is to detect and address potential risks and abnormalities before the end of the month. The outcome of exception-based reporting is the ability to make informed decisions that help minimize risk and enhance performance. 

When using exception-based reporting, measuring various aspects of performance is important. This can include sales, gross margin, operating expenses, and working capital. By reviewing data daily, weekly, and monthly, you can identify trends and focus your analysis on key areas of your business. The thresholds that trigger an exception should be set based on the materiality of each metric and metric category.   

Data Intelligence - The Future of Big Data
The Future of Big Data

With some guidance, you can craft a data platform that is right for your organization’s needs and gets the most return from your data capital.

Get the Guide

To gauge the health of a business, sales are often reviewed on a monthly or quarter-to-date basis. Daily and weekly sales data are important for exception-based reports. Analyzing sales by product, customer, and volume can offer valuable insight into the direction of the business. Comparing sales trends to the previous year, budget, and the past 12 weeks can indicate where the business is heading. Additionally, calculating gross margin can provide a clearer understanding of profitability and available working capital. 

Considering Your Options

When it comes to exception-based reporting, it’s important to consider operating expenses, which include selling, general, and administrative expenses. By calculating a daily and weekly burn rate based on the past 52 weeks, it’s possible to determine how effectively expenses are being managed in relation to sales trends. Staying on top of sales and operating expenses before the end of the month allows for better management analysis and decision making, resulting in better business outcomes. 

Working capital movements as part of exception-based reporting can provide unique insights into how well the business manages its balance sheet. These include metrics such as: 

  • Past due accounts receivable or A/R aging 
  • Cash receipts 
  • Disbursements 
  • Payables movement 

Working capital metrics are often not considered for exception-based reporting; however, they are as important to the overall financial management of the business as sales and margin. 

Metrics & Comparison Basis 

The Following Measures Are Examples to Include in Daily, Weekly, and Monthly Exception-Based Reports: 

  • Sales (Volumes)
  • Gross Sales
  • Gross Margin
  • Selling, General, and Admin Expenses
  • Headcount
  • Accounts Receivable Movement
  • Accounts Receivable Aging
  • Accounts Payable Movement
  • Short-Term & Long-Term Debt Movement
  • Cash Receipts
  • Cash Disbursements 

Comparison basis for exception flagging include:

  • Daily vs. Prior Yr.
  • Daily vs. Prior Week
  • Daily vs. Trailing 90 Days
  • Daily vs. Forecast 


  • Weekly vs. Prior Yr.
  • Weekly vs. Prior Week
  • Weekly vs. Trailing 12-Week Average
  • Weekly vs. Forecast


  • Month to Date vs. Prior Yr.
  • Month to Date vs. Prior Month
  • Monthly vs. Budget & Forecast 

Now What?

Exception-based reporting should be part of the overall reporting workflow. With limited resources, finance teams need exception alerts that feed them outliers. Deployed effectively, exception-based reporting shifts priorities, pivoting to threats identified in your data. New technologies, including Corporate Performance Management (CPM) Solutions and Artificial Intelligence (AI), improve exception-based reporting capabilities. As businesses grow, more data is generated, and exception-based outputs can become difficult for finance to sift through. Utilizing CPM and AI can ensure that finance is working on exceptions that truly require investigation.

Contact us to learn more.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Carlos Fox

Carlos Fox is a Director of Strategy and Innovation at Perficient, focused on The Office of Finance. He is a CPA with 25 years of experience in the CPM, ERP, and Analytics domains. Based in Atlanta, he works with Perficient’s global client base. Carlos is a graduate of the Georgia Institute of Technology, Scheller College of Business.

More from this Author

Follow Us