Finding it difficult to understand the numbers?
Ever considered that perhaps the reason you are finding numbers difficult and confusing is because you are being given numbers that are either irrelevant, too much information, or presented in a format that you cannot relate to?
This is not your weakness, but a weakness of your finance team.
The problem is, accountants like numbers, in fact they love numbers. And therefore they think the more numbers they give you, the better the job they are doing. Obviously! And when you ask a question, the tendency is to respond with even more numbers.
The “right” information
I am a qualified accountant and experienced CFO and whilst I have the ability to interpret the detailed figures, the fact is that as an Executive Leader or Non-Executive Director, I often don’t want to. What I want and need is less information and not more. But that information needs to be the “right” information, which includes:
- Keeping it simple
- Relevant and easily understood
- Provides a snapshot of current performance and position:
- Relative to budget and prior periods
- Operational metrics in addition to the financials
- A predictor of future performance:
- Forecast of where we are likely to land at the end of the year
- Lead indicators of longer term performance
- Answers the question “Are we solvent?”
- Working capital position, and more importantly
- Cash flow forecast
What might be referred to as the Critical Numbers to informing business decisions
What does it look like
Over the years of working in business as a CFO, and as a Board member I have seen financial reports for the Board that comprise 20 pages of MYOB reports, and accountants that struggle to tell you if the business made a profit or loss, let alone how that varied from budget, or why.
I have worked with other accountants whose standard response to a question is: “That’s what the spreadsheet says” or ” I can send you the spreadsheet with more detail if you like“.
In working with these accountants I have mentored or coached them to becoming valued partners in business through providing less quantity and more quality information, in the context of the bigger picture. To be client focused, providing the information the business actually needs to drive decision making, as opposed to providing the business with the information the accountant thinks they need (or is easiest to produce!).
