The Language of Numbers. Are You Financially Illiterate or Is The Message In The Wrong Language?
Often, when we plan to communicate, we rely on things like texts or emails. The art of a verbal conversation is disappearing in a trail of #hashtags and #emojis! We are, more and more, valuing quick conversations where we don't spell out our entire thought.... WTF! LMAO!
In the world of finance/accounting/bookkeeping, the language of our craft (the NUMBERS) has, historically, been approached with hesitation, confusion and an upfront misunderstanding. Pages and pages of well thought out, carefully balanced and analyzed tables of numbers leaving the reader uncertain of the message we worked so hard to communicate.
Confusion, not based on an absence of detail, but rather, based on using a language that the reader does not feel competent to read. Imagine be handed a novel written in Latin, how many of us would feel comfortable giving the book report?
Any finance person who represents "best in class" acts as the translator of the business result to a language that the reader understands. No two businesses are the same. Therefore, a one size fits all report (like the traditional financial statements) will likely not address the specific measurements that will track the success of your company.
The ultimate translation to answer the basic questions all business owners will have like:
Is that good?
How am I doing?
must be presented in a language that the business owner understands. And, just like our verbal communication is moving towards #hashtags and #emojis, our financial communication needs to move towards visual representations of the message with business language to support the conclusions.
The finance person #hashtag is the use of Business Talk. Adding words to reports that describe the business environment and translates that to a financial outcome. Answering the question WHY?. A statement like "Sales are higher in June versus the prior month" does not help the owner see that the finance person understands that "The new product we launched at the end of May raised sales in June by 15%."
The finance person #emoji is the use of graphs and icons. And just like you would not communicate only with emojis, choosing when to utilize this communication is powerful. Overuse is just as confusing as the original financial statements themselves. But a communication that includes the right visuals can drive home a message with a high degree of effectiveness.
The traditional financial statements serve a purpose: To help banks and the CRA understand your business and make some comparisons to other companies "like yours". But there really isn't another company "like yours" is there? Your company is unique. And the day-to-day review of your business needs to be created with your unique performance in mind. Putting these metrics in a visual format so that a busy business owner knows quickly where to divert attention is the key to good financial communication.
Communicating in a language not well understood by the reader guarantees misunderstanding. In this way, the finance person must be "multilingual" and prepared to speak in the language that works best for the business that is being supported. Dashboards, KPIs and graphs which are built in a foundation of well thought out, carefully balanced and analyzed tables of numbers allows today's finance person to partner with the businesses they support.
In today's financial communication, we are experts at Business Communication. The financial information supports the message but it is not, in itself, the message.