Financial reporting is only as effective as the audience’s understanding of what is being presented, how it affects them, and how they may interpret the information. If the meeting is full of finance-savvy team members, it can be a cakewalk. However, conveying the numbers to non-financial executives can be a perilous journey on an uncharted path.
How can a CFO or a Finance Business Partner be certain that they’ve made their point in financial reporting?
In this post, we’ll go over a step-by-step guide on how to make non-financial executives connect with company numbers.
Executives do not all have the same level of data and financial knowledge. Perhaps prior roles did not require them to have a clear understanding or they weren’t required to understand their impact on the financials.
In these cases, being thrown into a slew of numbers can be daunting. It’s possible that their hesitation to sit through a financial discussion may be less about their indifference toward results and stem more from their lack of understanding of them. When presenting financial data, it’s important to keep in mind that some individuals may have never had to take a finance or accounting course, or haven’t in years, and won’t grasp what the Finance partner is talking about.
A little empathy for non-financial team members can go a long way. Not only can it help reduce the amount of stress in meetings and conversations but it can also assist the Finance Team in developing a strategy for overcoming these challenges by employing the following tips.
Presenting figures on a page with all of your backup files may be the quickest method to present data, but it’s not the most appealing approach to engage an audience that needs to stay informed and make decisions. One of the oldest and most powerful ways to transmit information, especially financials, is through narration and storytelling.
To present a story, utilize slides or memos to summarize the key points in clear tables, grids, visuals, and text. One best practice is to use fewer words to communicate as much of the key takeaways as possible.
“Sales from our new product launch are up from $900K last quarter to $1.2M this quarter (33%), which is ahead of plan by 15%”
“Quarterly new Product revenue trending 15% above plan, up $300K (33%)”
We simply presented the what (new product revenue), when (quarter over quarter), and the “so what” (it’s up over plan) in about 10 words, with no unnecessary words or fillers.
The main takeaways in storytelling should always include how the performance compares to the plan, as well as what people should walk away understanding:
- Are we on the right track?
- If not, what is the reason?
- So, what are we going to do about it?
- What should I be happy about or concerned about in this situation?
Adjust to the Audience
Before deciding on a presentation format, think about who will be your audience. Everyone benefits from summarizing information in a clear and understandable manner, but the level of detail on the backup to the number varies depending on the sophistication of the audience. One can always prepare for both by presenting summary information but having an appendix or backup for additional detail.
Keep it Relevant
Everyone in the audience is there to learn what objectives they met or missed, as well as what they should do going forward. Keep the data as relevant to the people in the meeting as possible by relating the insights back to their business segments and performance when possible. This helps keep their attention and allows them to concentrate on the takeaways that they may share with their team.
Less is More
Even though the Finance Team undoubtedly spent hours or days gathering the data being presented, some executives may not be able to manage the amount of detail that finance teams are used to. Keep business presentations concise, but be prepared to backup data if necessary. Some people may want to understand all the information that went into the results. Make a point of keeping the details on hand and being able to adequately explain them if inquiries arise.
The best way to explain financials to non-financial executives is to build their confidence in understanding financial data if it is not an area of strength for them. Consider introducing a Finance 101 series to the company to educate employees on the fundamentals of budgeting and reading financial statements. These modest gestures can help teams build trust and become more invested in financials. Approach everyone with empathy, and foster a collaborative learning atmosphere.