What is a Profit & Loss Variance Report for a Distribution Company?

Profit & loss (P&L) variance reports are considered essential monthly performance monitoring tools and are used by the office of finance to provide distribution executives with a concise view of prior month and year-to-date (YTD) results. Some of the main functionality in this type of report is that it gives the user a quick view of P&L KPIs followed by a detailed, comparative view of revenues, expenses and profit margins. The metrics and charts on the top of the report help highlight revenues, profit, profit margin and revenue per employee. The columns provides comparison of monthly and YTD figures for the current year versus the prior year, with the colored arrows serving as indicators of significant variances. You find an example of this type of report below.

Purpose of Profit & Loss Variance Reports

Distribution businesses use Profit & Loss Variance Reports to help executives quickly understand monthly and current year performance and to put it in perspective by comparing it to prior year figures. When used as part of good business practices in Financial Planning & Analysis (FP&A) departments, a company can improve its strategic decisions and agility, and it can reduce the chances that important variances go undetected for longer periods of time.

Profit & Loss Variance Report Example

Here is an example of a Modern Profit & Loss Report with KPI charts and variance analysis.

Example of an Profit & Loss Variance Report for a Distribution Company

Example of an Profit & Loss Variance Report for a Distribution Company

You can find hundreds of additional examples here

Who Uses This Type of Report?

The typical users of this type of report are: Boards, executive teams, CFOs and controllers.

Other Reports Often Used in Conjunction with Profit & Loss Variance Reports

Progressive Financial Planning & Analysis (FP&A) departments sometimes use several different Profit & Loss Variance Reports, along with  P&L trend reports, balance sheets and cash flow statements, financial KPI dashboards and other management and control tools.

Where Does the Data for Analysis Originate From?

The Actual (historical transactions) data comes from enterprise resource planning (ERP) systems like: Microsoft Dynamics 365 (D365) Finance, Microsoft Dynamics 365 Business Central (D365 BC), Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics GP, Microsoft Dynamics SL, Sage Intacct, Sage 100, Sage 300, Sage 500, Sage X3, SAP Business One, SAP ByDesign, Acumatica, Netsuite and others.

In analyses where budgets or forecasts are used, the planning data most often originates from in-house Excel spreadsheet models or from professional corporate performance management (CPM/EPM) solutions.

What Tools are Typically used for Reporting, Planning and Dashboards?

Examples of business software used with the data and ERPs mentioned above are:

  • Native ERP report writers and query tools
  • Spreadsheets (for example Microsoft Excel)
  • Corporate Performance Management (CPM) tools (for example Solver)
  • Dashboards (for example Microsoft Power BI and Tableau)

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