Preface

Our Experience with Financial Communication xiii

Chapter 1 Why Financial Communication to Executives Requires Special Attention 1

The Pressure Is Mounting on Executives 3

Insight × Influence = Impact 4

The Purpose of Finance 7

The Value of Finance 10

The Intrinsic Motivation for Finance Professionals 12

The Job Is on the Line 14

All We Need Is a Framework for Financial Communication 15

Chapter 2 The Struggles of Finance Professionals To Communicate Financials 17

The Three Main Challenges 19

Sharing Too Many Details 21

Having No Consistent Structure 23

Making No Apparent Recommendations 26

Chapter 3 Five STEPS FOR COMMUNICATING FINANCIALS To Executives 31

Take a Customer-Centric Approach 33

From Data to Insights 36

Five Steps for Financial Communication to Executives 38

Info 39

Insights 41

Recommendation 42

Evidence 44

Action 46

Sarah Gets to Know Her Customers 47

Chapter 4 Step 1: Information: What Is the Financial Status? 51

Define an Objective and Target Stakeholder 52

Consider Your Audience 55

Data Extraction: Access Relevant Data Sources 57

Data Preparation: Build on a Proper Foundation 59

Master Data Management 59

Data Cleaning 60

Chart of Accounts and Financial Statements 62

Data Analysis: Extracting Relevant Insights 63

Horizontal Analysis 64

Vertical Analysis 66

Variances and Deviations 69

Using Technology to Your Advantage 70

Data Selection: Present Only What Matters 72

Moving from Information to Insights 75

Sarah’s Data Struggle 76

Chapter 5 Step 2: Insights: What Are the Key Attention Points? 79

What Is an Insight? 80

Cater to Your Audience 85

Empathy: Present Insights Relevant to Your Stakeholders 86

Verify Your Understanding 90

Acknowledge Personality Types 91

Types of Analytics 93

Tips on How to Communicate Your Insights 99

Tip 1: Golden Rule of Three 99

Tip 2: Curate Based on Criteria 101

Tip 3: Do not Just Summarize – Synthesize 104

Moving from Insights to Recommendations 106

Sarah Uncovers the Root Causes of Poor Revenue Performance 108

Chapter 6 Step 3: Resolution: What Can We Do About It? 113

Distinguish Between Output and Outcome 115

Dare to Have an Opinion 118

Leverage Structured Problem-Solving 120

Define the Problem 121

Disaggregate the Problem 124

Design the Solution 128

Tips for Making a Recommendation 129

Prototype – Make Your Solution Visible 129

Present Options – There Is Never Just One Solution Option 130

Anticipate Objections – Be Ready with a Reply 131

Supporting Your Recommendation with Arguments 132

Sarah Ideates Potential Solutions 132

Chapter 7 Step 4: Argumentation: Why Is This a Good Idea? 137

The Difference Between Argument and Facts 138

Facts: The Foundation of Trust 138

Arguments: The Art of Persuasion 139

The Interplay of Facts and Arguments 140

The Magic Number of Three: Why Three Arguments Are Ideal 142

The Psychology Behind the Number Three 143

Three Arguments to Convince Management 144

Expanding the Definition of Facts Beyond Numbers 146

Expert Statements 146

Customer Testimonials 147

Industry Research 148

Integrating Non-Numerical Facts with Financial Data 149

The Importance of Selectivity 150

Why Selectivity Matters 150

How to Select the Right Three Arguments 151

From Argument to Decision 153

Sarah Backs Up Her Recommendation 153

Chapter 8 Step 5: How Do We Get Started? 157

Summarize and Ensure a Common Understanding 157

Anticipate Change Resistance 158

The SCARF Model – Sources of Change Resistance 159

Pave the Way Forward 163

Insist on a Decision: Turning Discussion into Action 166

Getting Started with the New Sales Channel 169

It’s Time to Present 171

Chapter 9 Considerations on Data Visualizations 175

Make It Easy to Decode Your Key Message 177

System 1 and System 2 Thinking 180

Designing for System 1: Presenting Insights Clearly and Effectively 181

Engaging System 2 When Necessary 182

Minimizing Cognitive Load 182

A Picture Is Worth a Thousand Words 183

The Split-Attention Effect 185

Pre-Attentive Attributes and Gestalt Principles 186

Pre-Attentive Attributes: Highlighting the Key Message Instantly 187

Gestalt Principles: Organizing Information for Better Understanding 188

Tips for Better Data Visualization 189

Tips for Great Slide Making 196

Place the Argument in the Header 198

Use Action Titles in the Header and Charts 198

Stick to One Key Message per Slide 198

Present Only Evidence Supporting the Argument (in the Header) on the Slide 199

State Your Sources 199

Use Call-Outs to Highlight Key Points 199

Use Colours to Make Charts Easy to Read 200

Use Large Readable Fonts 200

Chapter 10 How to Prepare the Perfect Management Report 201

Structuring Your Management Report 203

A Mock-Up of the Perfect Management Report 206

Chapter 11 How Finance Professionals Become Excellent Communicators 217

Without Using SCQA 220

With the Use of SCQA 221

Business Cases 222

From Analysis to Presentation 223

One Size Does Not Fit All 226

Final Tips on Communication 228

Before the meeting 228

At the meeting 229

After the meeting 230

Chapter 12 Practical Steps to Start Improving Your Communication Skills 233

Taking the First Steps 235

Comparison and Feedback 235

Ask Your Audience 236

Prepare Your Mock-Up 236

Implement and Continuous Improvement 237

The Next Steps 238

Awareness 239

Desire 239

Knowledge 239

Ability 240

Reinforcement 240

From Steps to a New Company Culture 241

It Is Time to Get to Work 243

References 245

Index 249