18 Ways To Effectively Communicate Financial Data To Stakeholders

Effective communication of a company’s financial performance and strategy is crucial to building trust and securing support from stakeholders, including investors, lenders and regulators. Leaders must navigate complex financial data and distill it into clear, compelling messages that resonate with diverse audiences.

Here, Forbes Finance Council members share essential strategies that can help leaders excel in this critical aspect of corporate governance.

1. Anticipate Stakeholder Expectations
Understand the expectations of each of the key stakeholders. Match their expectations and concisely answer their intrinsic question of what is in it for them. For example, the government is concerned about taxes and cash, and investors are concerned about returns and valuations. Weave your storytelling to provide comfort that their capital is reasonably safe. Use visuals, roadshows and press releases. – Oluwatoyin Aralepo, Mastercard Foundation

2. Make It Simple
Too often, people forget the real value is in simplicity. If the strategy can’t come down to a mission statement that everyone can understand and articulate, then it’s not a clear strategy. The financial performance should reflect what’s important. If you are focused on the highest margin rather than the highest volume, both reporting and strategy should emphasize this. – Dryden Pence, Pence Capital Management

3. Report Metrics Consistently
Keep it consistent. Choose three to five metrics that matter most for your business in the current moment, and then report them consistently. Supplement that with brief context on trends and changes. – Michelle DeBella, JumpCloud

4. Communicate The Risk
When communicating financial performance, an overlooked opportunity is for leaders to frame the performance numbers in the context of risk. The focus usually tends to be on relative results versus expectations, but communicating the relative risk of the strategy being employed is also very important. – Shon Anderson, Anderson Financial Strategies LLC

5. Build Trust With Clarity
For effective stakeholder communication, companies must transparently convey financial performance and strategy. Use clear language, emphasizing key metrics and future objectives. Keep it concise and visually easy to intake the information. Regular updates, interactive presentations and addressing concerns build trust with investors, regulators and lenders. – Amanda Kristinat, Moonshot

6. Avoid Technical Terms
Avoid jargon and technical language that may be difficult for stakeholders to understand. Visual aids, like charts and graphs, are a great resource for simplifying complex data and provide a reference to refer back to when discussing further. – Xan Myburgh, Backd Business Funding

7. Provide Contextual Details
Although you want to present the data accurately, context matters. Therefore, you should try to provide as much detail as necessary to give an accurate picture of your financial performance. – Justin Goodbread, WealthSource Partners, LLC

8. Be A Good Storyteller
Good storytelling is better than data dumps when it comes to effective communication. Try to put the numbers in the context of benchmarks or trends to show how you did, not just what you did. For instance, the quarter’s revenue is relatively useless without context. Show the last eight quarter trend and percentage of target or consider adding how you are performing in comparison to industry benchmarks. – Zack Cook, Keyfactor

9. Request Stakeholder Feedback
Financial performance and plan information need clarity, two-way communication and stakeholder updates. Trust builds relationships. Start a conversation by soliciting stakeholder feedback. It improves communication, teamwork and decision-making. Engage stakeholders differently. – Neil Anders, Trusted Rate, Inc.

10. Master The Art Of Diplomacy
Articulating financial performance and strategy requires diplomacy. Tailor the message to diverse stakeholders. Investors seek ROI and stability. Lenders crave repayment certainty. Regulators value compliance. – Jeffrey Bartel, Hamptons Group, LLC

11. Communicate On A Regular Basis
Regular updates and consistent communication with stakeholders—whether it be on a monthly, quarterly or annual basis—enhances stakeholder engagement. To build trust, it’s important that all communications adhere to regulatory requirements too. – Anthony Georgiades, Innovating Capital

12. Begin By Addressing Issues
Start with what is on everyone’s mind, don’t avoid or sugarcoat. The issues aren’t going away because you didn’t address them. If you missed a performance, explain why and how you plan to address it. If you exceeded performance, explain the drivers and how you will capture the momentum. Be honest and thoughtful and explain your plans—this will give confidence to your stakeholders, which is priceless. – Aaron Spool, Eventus Advisory Group, LLC

13. Craft A Cover Letter
Providing communication in the form of a cover letter is an effective way for leaders to articulate financial performance to a varied audience. It helps simplify and highlight key information in the financial statements and provides the leaders with an effective method for sharing interpretations and results. – Christopher Foder, CExP, First Financial Group – Meridian Financial Associates

14. Visualize Long-Term Solutions
It depends on whether you are a publicly traded or private company. If public, you must file financials quarterly that are certified and accurate. If private, you may not be required to disclose all details. Either way, you should transparently and authentically identify issues and present a vision of long-term solutions. – Leo Kanell, 7 Figures Funding

15. Provide Updates And Explanations
Leaders should prioritize transparency and clear reporting. They should provide regular updates and context by comparing performance with industry benchmarks and using visual aids to enhance understanding. Including narrative explanations about the company’s direction and opportunities is crucial. – Jared Weitz, United Capital Source Inc.

16. Forecast Financial Variances
If you understand the drivers that impact your business, you can explain the forecast and any variances to it. Don’t hide bad results, and be sure to explain the cause of any variances. Highlighting why there are differences enables leaders to shift focus to how they will correct the course. – Glenn Hopper, Eventus Advisory Group

17. Establish Credibility And Trust
It all comes down to making sure you’re prioritizing good communication. Good leaders need to keep in touch, engage regularly and put effort into establishing long-term credibility and trust. – Nick Chandi, Forwardly

18. Provide Market Opportunity Data
Have easy-to-read financials that include goals and metrics against those goals. Explain your clear strategy with supporting market opportunity data. Include the risks your company faces to help communicate your overall actual and forecasted financial performance. – Dave Sackett, AIOne, Inc.

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