Financial Bridge Template (Waterfall Graph) – Updated 2024

In the realm of financial analysis and reporting, clear and effective visual tools are essential for making complex data easily digestible. One such tool is the Financial Bridge Template, sometimes referred to as a Waterfall Graph. This powerful visualisation method is invaluable for demonstrating how individual components contribute to changes in financial performance over time or between scenarios. Whether you are tracking revenue, costs, or profitability (or even non-financial metrics), a well-structured waterfall graph can provide actionable insights.

What is a Financial Bridge Template or Waterfall Graph?

A Financial Bridge, sometimes called a bridge chart, illustrates various components’ incremental impact on a key metric, such as net profit or total revenue. The graph visually “bridges” the starting value to the ending value by showing the intermediate stages and their positive and negative contributions.

In finance, a Financial Bridge Template provides a structured framework for creating these graphs, saving time and ensuring consistency. It often includes preformatted charts, formulas, and placeholders for inputting key metrics, making it an essential tool for finance professionals.

Click the link below to download this financial bridge template in Excel.

Benefits of Using a Financial Bridge

1. Clarity in Reporting:
   Waterfall graphs break down complex financial movements into manageable chunks, making it easy to pinpoint significant drivers of change.
2. Actionable Insights:
   By isolating individual factors, you can identify problem areas or opportunities for improvement, such as rising costs or revenue growth.
3. Visual Storytelling:
   Stakeholders often prefer visual summaries over dense spreadsheets. A well-designed waterfall graph conveys key messages at a glance.
4. Efficiency and Accuracy:
   Using a prebuilt template ensures data integrity and reduces the time spent formatting charts manually.

Key Components of a Financial Bridge Template

1. Starting Value:
   This is the initial figure, such as the revenue or profit figure from the previous period, budget or scenario.
2. Positive Contributors:
   These are factors that add to the value, such as increased sales, cost savings, or new revenue streams.
3. Negative Contributors:
   These are elements that decrease the value, such as higher operational expenses like staff costs, or a reduction in sales.
4. Ending Value:
   This represents the final figure, summarising the cumulative effect of all contributors. This is usually the current forecast or actuals.
5. Bridge Bars and Connecting Lines:
   Bars represent individual components, while connecting lines maintain continuity between stages, helping to visually “bridge” the starting and ending points.

How to Create and Populate a Financial Bridge Template

1. Prepare Your Data:
   Gather and organise your financial data, ensuring you have clearly defined components that contribute to changes in the metric. You are looking for the key variances across the
2. Use a Template:
   Start with a ready-made financial bridge template. Many tools, like Excel and Power BI, offer prebuilt waterfall chart functionalities that you can customise.
3. Design Your Chart:
   Input your starting value, contributors (positive and negative), and ending value. Assign consistent colours to positive and negative impacts for clarity.
4. Analyse and Share:
   Use the completed graph to analyse key trends and share insights with stakeholders. Highlight critical drivers to guide decision-making.

Best Practices for Financial Bridges and Waterfall Graphs

• Keep It Simple: Avoid overloading the graph with too many components; focus on the most impactful drivers.
• Use Consistent Colours: Apply a uniform colour scheme to differentiate positive (e.g., green) and negative (e.g., red) contributions. You’d be surprised how often I’ve seen these the wrong way round!
• Label Clearly: Add concise labels to bars and ensure axis values are easy to interpret. I find it particularly useful to include the number values on each bridge item.
• Provide Context: Supplement the graph with a brief explanation or summary to enhance understanding.

Applications of Financial Bridge Templates

1. Revenue Analysis: Visualise how various factors, like pricing changes, volume shifts, and new customer acquisition, contribute to revenue growth or decline.
2. Cost Management: Break down cost changes, such as increased raw material expenses or efficiency savings, to understand their impact on profitability.
3. Budget vs Actual Performance: Highlight variances between planned and actual figures to identify areas of overperformance or underperformance.
4. Scenario Analysis: Demonstrate the financial implications of different strategic decisions, such as launching a new product line or entering a new market.
5. All Variance Analysis: This post focuses on the financial use cases, although this template can help visualise of changes in any metric with a start and an end point, for example total visitor number changes.

Conclusion

A financial bridge is a must-have tool for finance professionals seeking to deliver clear, data-driven insights. By breaking down complex data into its constituent parts, it provides a clear narrative that aids strategic decision-making. Incorporating this visualisation into your financial toolkit can elevate the quality of your analysis and help you communicate more effectively with stakeholders.

With tools like Excel and Power BI offering advanced capabilities for creating waterfall graphs, there’s no excuse not to integrate them into your financial reporting processes today.

If you found this template useful, make sure to check the other templates available on this site. For example, pairing this bridge with a Risk and Opportunities Template can be a great way to enhance the insight and impact you can deliver to your stakeholders.