The finance profession, with its unique combination of skills, certifications, and code of professional ethics, comes with its own intricate language. And herein lies a problem: communicating with nonfinance colleagues.
Finance, as business has evolved, has taken on a much more expansive set of roles. Today, we are co-pilots, navigators, and finance business partners, working across functional boundaries to create value for the organisations we work with or for. But we still speak an esoteric language and use concepts outsiders may find difficult to comprehend.
As the playwright (and co-founder of the London School of Economics) George Bernard Shaw once said, “The single biggest problem in communication is the illusion that it has taken place.”
Shaw knew then what we need to remember now: Just because we’ve shared our information or views doesn’t mean they’ve been received and understood. We need to remember who our audience is, especially if they work outside of finance, and find better ways to communicate with them effectively.
In some businesses, for example labour-intensive SMEs where senior management can tend to focus firmly on operational matters, leaders can sometimes lack financial awareness. There is a need to make the complex simple to support management better in its decision-making.
Here are our tips for explaining financial matters to nonfinance executives.
Go back to basics to explain concepts
Some people, even those in leadership roles, won’t “get” finance concepts such as accruals or deferred tax straight away. This is often due to the complexity of accounting reporting rules, language, and concepts, which can be intimidating. Try to put yourself in their shoes — would you understand the language and practices of their profession without someone to explain them to you?
Your job is to help them understand. If people don’t get it the first time, find a different way of explaining it until they do. A good approach is to take things back to basics by using household finances to explain concepts, such as clearing your more expensive credit card borrowing first before making overpayments on a low fixed-rate mortgage. Flowcharts and mind maps can be useful ways of visualising concepts.
Support managers’ priorities
Nonfinance managers don’t have the spare time to develop a deep understanding of finance. So, identify what matters to them and support their understanding of those concepts first. That might mean starting with factors affecting bonuses and long-term incentive plans, divisional performance, competitor benchmarking, or the differences between profit and cash flow.
Better understanding of the financial concepts that matter to nonfinance managers increases their buy-in for transformation projects, budgeting, and long-term strategic planning processes.
Provide access to dashboard data
By developing Power BI dashboards that display KPIs and include the ability to drill down to operational-level data, accountants can make financial information more accessible to all. These steps help accountants build trust and break down any invisible barriers that may exist between income-generating operations and finance as a support function.
Consider where you can add value
Some of a finance leader’s greatest contributions can come from playing “devil’s advocate”, helping nonfinance managers avoid making expensive mistakes. Be a critical friend and don’t be afraid to challenge “ego projects”.
Our role is to act as co-pilot in driving the business forward, but also to temper entrepreneurial exuberance with a reality check. Ensuring that leaders understand discounted cash flows and the importance of early positive inflows for projects will help them make decisions that support sustainable long-term growth.
Recognising the priorities of our stakeholders has always been important when producing reports and evaluating projects, but using our communication skills to educate and advise helps build the trust and mutual understanding essential for effective teamwork. And by helping our colleagues understand and engage with finance activities, we free up our own time for value-adding activities. Ultimately, this helps to ensure that we are all better positioned to achieve business success.
Rebecca McCaffry, FCMA, CGMA, is associate technical director, Research & Development–Management Accounting at AICPA & CIMA, together as the Association of International Certified Professional Accountants. Ian Brown-Lee, ACMA, CGMA, is a UKbased financial director with experience in sectors including real estate, construction, food manufacturing, and financial services. To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.
AICPA & CIMA RESOURCES
Tool
“Effective Communication Skills”, 27 December 2022
Podcast episode
“How to Become the Speaker People Listen To”, Journal of Accountancy, 11 March 2019
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