Telling the Story of Your Company Finances

Are you getting the most out of your company’s financials? You’ve probably already outsourced your bookkeeping, which is a great first step. Ensuring a dedicated expert is keeping up with your books and is preparing financial reports can rid you of a lot of headache. However, out of sight out of mind won’t work for financials. You need to make sure you’re getting the critical insights to help steer the business in the right direction!

Bringing the numbers to life

For some people, a financial document is clear and easy to understand. For the rest of us, we benefit from some interpretation and color. One of the things I enjoy doing at month-end is creating a story for the leadership teams rather than just throwing a P&L at them. The story includes all the necessary numbers, but also helps interpret the journey we took to get there. This ensures the critical data is understood, without getting lost in the minutiae!

How to approach the metrics

A great first step is identifying which metrics you’d like to prioritize. There are numerous categories you could track and record. But how do we start to interpret each of them without getting buried in the numbers? First ask, “Is this what we expected?” then “Why is this the number?” and push to finish with “What needs to happen next?” for each metric.

For example, we can imagine this process applied to revenue and expenses:

1. Revenue

   1. Is that what we expected?

   2. Why was the revenue lower/higher than expected? 

   3. What needs to happen next?

      1. Example action: look into new tool for leads.

      2. Will this continue next month? Next quarter?

2. Expenses

   1. How did our actuals compare to our budgeted expenses?

   2. Why were we over in expenses?

   3. What needs to happen next?

      1. Example action: put in process for expense requests.

This process can be applied to all of the metrics. When you thoroughly examine each piece, you’re able to gain new insights and digest the larger document. Your first pass might take longer than you expect; but the time investment is worth it! Changing the way you interpret your financials will help give you a more accurate understanding of where your business is headed.

Creating a story around these insights will lead you to more actionable steps. This allows leadership to read a story of what happened / what needs to happen, instead of staring at a bunch of numbers. What story does your business have to tell?