Humans are Visual Learners.
Frederick R. Barnard first introduced us to the idea that “A picture is worth a thousand words” in December of 1921. He was writing a publication about the effectiveness of graphics in advertising and the phrase has only become more and more accurate in the last 100 years. Visuals tools in advertising are substantially more effective than words alone. Visual tools have the same effect when used in Financial Reporting as well.
Think about these amazing facts about how the brain absorbs visual data;
- The human eye can register 36,000 visual messages every hour.
- Of all the information transmitted to the brain, 90% is visual.
- As opposed to text, visuals are processed 60,000x faster.
- 40% of nerve fibers are linked to the retina.
- Humans are capable of getting the sense of a visual scene in less than 1/10th of a second.
- Our brain can see images that last for only 13 milliseconds.
With these facts in mind, how would you change the financial reports you are sending to your customers? Let’s drop the spreadsheets, and the greyscale bar graph and add in some amazing visuals full of color and data! Get your customers’ attention with visually enhanced reports from Reach Reporting.
Different Types of Visuals.
So now that we understand the substantial difference pictures, graphics, and visual effects can make on the reports we create, let’s figure out which of the many choices works best for you and for your customers. Here are some of the most commonly used tools for data visualization. Each one has its best purpose and once we understand them all you can decide which are the best for each of your clients.
Bar Graph – We have seen this example most of our lives. Most often they are used to show how something changes over time or to compare items.
Pie Chart – This is the circular one that always makes me hungry. It is divided into slices to illustrate numerical proportions.
Table Charts – Table charts a highly common way of arranging data in rows and columns. We see these everywhere and are quite familiar with how to read them.
Bubble Clouds – Closely related to a bubble chart, this tool is a great way to visually showcase three fields of data by using both the position and proportion of the bubbles.
Bullet Graphs – This is closely related to the bar graph but includes a thermometer inspired part that indicates where in the process something currently sits.
Heat Maps – This visual data technique includes color to show the data. Similar to the way a bar graph uses height and width.
Radial Trees – Also called radial maps, this tool shows radially how data stacks on top of each other, like a tree. It is often used to show hierarchy.
Infographics – This visual tool does exactly what it names says; it incorporates information into a graphic.
Things to Remember When Choosing and Creating Visuals.
Once you are ready to create a visually enhanced financial report, the first and the most important step is understanding who your audience is and creating a context that is best for them. Compiling a financial report for another accountant will look VERY different than a report you create for the owner of a construction company. Speak to your audience. Chances are most of your clients are not financially savvy, that is why they hired you to take care of their books, accounts, and financial reporting. Remember that when deciding what to include in your report and how to include it. Choose the visual tools that best work with the data you need to portray.
Second, only focus on important points. Put some time and thought into what information is the most important and focus on that data. Too much information can and will be overwhelming to a non-financial person. Really pinpoint for them the most essential information for them right now.
Third, when creating any type of infographic or visual tool be sure to remember the 10 basic design principles. Don’t get overwhelmed, most of it is stuff you already know about design. By following these principles, you will be better able to focus on the most important pieces of information.
Lastly, remember you are a storyteller. You are telling the financial story of your clients’ business. Keeping this in mind will help you create the most stellar, beautiful, and informative financial report for your client.
The Importance of Data Visualization in Financial Reporting.
Financial reports can be data-heavy and often a little dry (I know, shocking information). By using visual tools you can turn that data into an easy to understand report for your clients. By following the steps above you will have the ability to WOW your clients with the best financial information for them and that point in time. Not only will they love the report, but you will also become an invaluable asset to them and to your business.
Humans are visual learners, we always have been. The study of our brain proves that! So use it to your advantage by adding loads of visual data in your reports.