A variance report tells you what changed. A good one tells you why, and what you're going to do about it. Most variance reports do only the first thing, in a font too small to read.
Start with materiality
If a variance is less than 5% and less than ZAR 50k, don't waste a sentence on it. Materiality thresholds should be on the front page of the report; everything below them is suppressed by default.
Timing vs. structural
A late supplier invoice creates a timing variance — it will reverse next month and shouldn't drive a decision. A pricing shift creates a structural variance — it won't reverse, and it should drive a decision.
Tag every material variance with one or the other. The conversation it deserves depends on which it is.
Commentary in three sentences
- What happened (cause).
- Why (quantified driver).
- What we're doing (owner + action + date).
Without an owner and an action, a variance report is a history book, not a management tool.
The two missing columns
Most variance reports have: Actual, Budget, Variance, %. Add two more: Owner, and Action. Suddenly the report is something the exco can act on, not just absorb.
A reader-friendly format
- One page per section (revenue, gross margin, opex, EBITDA).
- Material variances only.
- Tagged timing or structural.
- Three-sentence commentary.
- Owner and action visible.
