Why Every Finance Power BI Report Needs a Waterfall Chart?

At the first glance, waterfall charts may look similar to a regular column chart, but there are quite a few specifics that make them uniquely suited for their purpose – visualizing the entire story of how you arrived from one value to another.

Let’s start with the good old column chart – it displays values for each category on the X-Axis separately, allowing you to visually compare the difference. It does its job perfectly when you have multiple similar categories (e.g. sales per country, brand or department), but it shows only the final value, and not how you got there.

That’s where waterfall charts come in. A waterfall chart will start with the initial value column, and each increment will be displayed as a subtraction or addition to the previous value. The end value will display the grand total, which will be the start value after all the subtractions or additions along the way.

The classic example are finance statements – you start with gross revenue and end with net profit, so waterfall charts are designed to show each step in the way (manufacturing costs, capital and operating expenses, taxes, etc.) that contributed to the final value. Other use cases also include project tracking, performance monitoring, inventory management and more; basically anything that needs to show incremental changes and their effect on the total.

In short, here are the main differences between column charts and waterfall charts:

• Column chart: Each column is an independent value. Used to compare different values against each other.
• Waterfall chart: Each column adds or subtracts from the previous value, showing change as a step-by-step process.

Tips for Better Power BI Waterfall Charts

Here are some useful tips on how to get the most out of waterfall charts and provide valuable insights to your report users.

1: Colors as a Storytelling Tool

In data visualization, color is used for more than just making sure the report looks nice. It also conveys meaning and instantly paints a picture to the reader at the first glance. Correctly selecting a color palette will enhance data storytelling, but poor color choices may lead to misleading or biased first impressions.

The most widely known example of this is red and green, which in finance context means loss and gains – hence the expression “in the red” or “in the green”.  This meaning can also be found in traffic lights (stop / go), UI design (cancel / proceed), and even nature (danger / harmony). Similarly, yellow is used to highlight something or call attention, and blue represents stability, calmness.

In Waterfall PRO visual for Power BI, you can apply separate settings for positive changes, negative changes, and totals – column colors, connection lines, value labels, and more. Leverage this to better communicate with the report user – for example, by making positive changes green and negative changes red. Of course, you can also incorporate your own branding guidelines in the color scheme and ensure that the waterfall chart fits in perfectly within your report.

2. Defining the Sequence

For waterfall charts, the order in which the data is displayed matters a lot. For example, when visualizing taxes that are applied only to a specific expense in the statement. If you want to ensure that the chart arranges all values exactly how you want, you can use the Sequence field in Waterfall PRO, which will use numbers in the provided column or measure to define the display order, overriding the default sorting methods.

3. Additional Chart Elements

In addition to the columns themselves, there are many other chart elements that can be used to communicate insights to the user. For starters, you can configure axis labels, value labels, legend items and more. Ensure that they are readable by choosing an appropriate font style, size, color, and other settings.

We also want to talk about some options in our Waterfall PRO that can be useful for data analysts. The first one is Comment field, which can be used to display on-chart annotations directly on the chart. It will show a marker near the value, and a comment next to the chart. For example, it could provide an explanation about a change in value, such as external factors or a production issue.

Then there are thresholds, which are useful to compare your data against KPIs or targets. Here, you can display it as a simple line at a constant or calculated value (Min, Max, Average, First, Last, Percentile etc.), or an area between two values. Another way to use this feature is by displaying Change, which will compare two values and display the difference as a positive or negative arrow.

4. Integration in Your Report

Waterfall charts often find their home in finance, supply chain or management reports, so when designing these types of reports, you should consider how this visual interacts with other report elements and how each contributes to the larger data narrative.

On its own, the waterfall chart already provides a lot of valuable information. However, what if the user wanted to find out data about a specific region, product category or department? With cross-filtering, the user can simply select data in any chart or apply a slicer, and Waterfall PRO will instantly reveal data that’s relevant just to the applied filters.

It works in the other direction as well. Say, the user wants to explore a specific negative change in the waterfall and find out the reason for it. They can simply click on the column, and the report will instantly filter data related to that, allowing to analyze it in more detail across other charts in the report.

Do you use waterfall charts in your reports? Share your tips, experiences, and questions in the comments!