Sankey vs waterfall vs funnel: which chart for financial flows?

Sankey, waterfall and funnel charts all show how a number changes as it moves through steps, which is exactly why people mix them up. Pick the wrong one and a clear story turns muddy. The good news is that each has a shape it's genuinely best at, and once you see the distinction you'll rarely reach for the wrong one. Here's a practical rule of thumb for financial data.

The one-line rule

Use a Sankey when things split and merge into many paths. Use a waterfall when you're bridging one balance from a start value to an end value through a sequence of additions and subtractions. Use a funnel when you're tracking a single population dropping off through ordered stages. Sankey is about distribution; waterfall is about a running total; funnel is about attrition down one path.

When to use a Sankey

A Sankey shines when a quantity fans out into many destinations or several sources merge into one — and especially when both happen at once. Revenue that splits into cost of sales, R&D, tax and net income; a cash pool fed by operating, investing and financing inflows; a budget where income spreads across a dozen categories. The width of every ribbon is proportional to the amount, so proportion is the whole point. If your question is "where did all of it go, and in what proportion," it's a Sankey. That's why the income statement Sankey became the default way to share earnings.

When to use a waterfall

A waterfall is the right call when there's a single running balance and you want to show how it got from A to B — a bridge. Think revenue bridge from last year to this year, an EBITDA bridge, a variance analysis, or gross profit walked down to net income as a sequence of steps. Bars sit at the height of the running total and each step nudges it up or down, with the connectors making the cumulative effect obvious. A waterfall keeps one number in view the whole time; a Sankey lets that number branch into many at once. If you don't need to show splitting into parallel paths, a waterfall is usually cleaner.

When to use a funnel

A funnel is for a single population moving through ordered stages where the only thing that happens is drop-off: leads to qualified to demo to closed, or visitors to signups to paid. Each stage is a subset of the one before, so the chart narrows monotonically. The moment your data branches into parallel destinations rather than a single shrinking path, the funnel breaks down and you want a Sankey instead. Funnels answer "how many survive each step of one journey," not "how does the total divide up."

• Sankey: many splits and merges; proportion of a whole; widths carry the meaning.
• Waterfall: one running balance bridged from start to end via up and down steps.
• Funnel: one population shrinking through ordered, nested stages.
• Rule of thumb: branching paths → Sankey; a bridge → waterfall; a single drop-off → funnel.

A quick worked example

Say you're presenting quarterly results. To show how total revenue divided across every cost and landed as profit, use a Sankey. To show why net income moved from last quarter to this one — higher revenue, offset by a one-off charge and more tax — use a waterfall. To show how many trial users converted through onboarding to paid, use a funnel. Same quarter, three questions, three charts. Match the shape to the question and the story tells itself.

None of these is strictly better than the others — they answer different questions. The mistake is defaulting to whichever you built last time. Ask whether your data splits and merges, bridges a balance, or drops off down one path, and the right chart picks itself.