“For a non-financially literate audience, an excel spreadsheet with numerous tabs is going to be met with dread.”
One mention of the word can see non-financial colleagues checking their watches. Making excuses about somewhere else they need to be, as the Finance Director commences a detailed analysis of the organisation’s financial position.
The word I would introduce for any non-financial person in an organisation when finance comes up, is Why?
Be curious. Simply reflect on what do I need to know to run my business area, respond to financial requests, and get the knowledge and information in a way that I will understand it.
Why am I being asked for / receiving financial information?
It is vital for the provider of information to be clear as to why they are being asked for the information. How exact does it need to be (audit purposes) or how general can it be (for budget purposes, based on a set of assumptions). Talking of assumptions, financial models are based on sets of assumptions, and financial reporting is based on a set of policies.
The finance team develop and maintain this, keeping in line with regulatory and audit requirements. You don’t need to worry about these other than knowing these exist.
For example, if you are investing in new equipment for your business area. You may need to know the principle of depreciation (from a numbers perspective, reducing the value of the asset purchased over its useful life). The finance team will determine the policy applied to this.
Why do I not understand the numbers?
For a non-financial literate audience, an excel spreadsheet with numerous tabs is going to be met with dread. Numbers in isolation don’t really tell us anything. But when reviewed with budget/historical/forecast information, trends appear.
Trend data can be converted into pictorial forms, providing the same information but in an entirely different language. One that can be uniformly understood.
The authenticity of the numbers is unchallenged, still produced from the heart of accounting software (using sets of assumptions and accounting policies). As a result, the engagement and response is infinitely heightened.
It is crucial across organisations to ensure that information (of any sort) is understood, and that misunderstandings do not creep in. By sharing the intended outputs, and associated goals, can help groups of leaders determine the best way to present.
Go and speak with your the finance team. Spend a day there to learn why they do what they do. The ‘Scrooge’ image of finance being behind a closed door at the end of a long corridor is historic in most organisations, with finance now seen as a partner.
Having the sales team partner with finance to make sure customers pay their invoices without interrupting future sales opportunities. Or operations teams presenting alongside finance the benefits of capital investment to funders. Everyone needs to understand that finance is at the heart of all organisations.
Stripping back the statutory formalities, simplifying the terminology and ensuring information is shared in a format that everyone can respond to, are key to a healthy organisation.
In summary, as with any organisation, the key is communication:
- As a finance team, do you know your audience – ask how information should be presented to get the key facts and messages across;
- As a non-financial leader, do you understand what you are receiving. Don’t work on the assumption it’s all correct and doesn’t relate to you; and
- For everyone, if you don’t understand, be curious. Ask why?
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Associate tutor of In Professional Development