Are you responsible for improving financial literacy?

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How do people picture finance departments? Do they see accountants hunched over bean-littered desks ready to hand out stacks of efficiency-sapping paperwork?

The stereotype is farcical. But it’s important to recognise communication impacts more than perception. Finance teams have the opportunity to educate staff, improving relationships and helping them impact the business’ performance.

Communicating metrics effectively

KPIs are a good place to start. Non-professional staff can struggle to understand abstract accounting concepts. Why they’re important and what impact they can have.

Paul Bulpitt, co-founder of accountancy practice The Wow Company, argues finance professionals should work to strip back data and make metrics more accessible:

“The biggest challenge for those not involved in finance or accounts on a day-to-day basis is that it can be overwhelming,” he said. “If we walked in and started teaching front-end developers the beautiful geometry that sits behind a balance sheet they're just going to glaze over.”

AccountingWEB member Mrme89 echoed the sentiment. Stressing the need to make KPIs relevant by explaining what they mean, why they are important and how employees impact them.

This means bridging the gap between lagging and leading indicators.

“If you want to impact profit cash, debtors or sales. What are the activities that need to come before that?” asked Bulpitt. “All of a sudden you’re connecting the non-financial, which is the number of times your sales team picks up the phone in a day with the financial outcome, which is sales profit and cash.”

Improving financial competence beyond salespeople and managers

Salespeople and managers are obvious targets for this process. But it doesn’t need to stop there. Potential managers can be given financial training, improving the impact they have in their current role and increasing engagement.

Staff involved in delivery can be shown how they make a difference. This avoids the potential for motivation to be damaged by being told to meet deadlines or KPIs without understanding their importance.

“If you're a graphic designer you want to produce something beautiful but you're not necessarily thinking about the profitability of what you're doing,” said The Wow Company’s Bullpitt. “No one's ever taught you about the profitability of what you're doing and why you've got two hours to do this.”

As AccountingWEB member Johngroganjga points out, the ability to make technical subjects intelligible to the lay person is a key professional skill for accountants.

There’s a balance to be struck with the amount of detail you provide. AccountingWEB regular DJKL highlighted the importance of “recognising when the eyes of the ‘muggles’ are glazing over and one is approaching system shutdown”.

“The best approach is to observe the listeners and modify presentation depending upon reactions,” he added.

Europa Worldwide Group’s been through a significant restructuring over the last five years. It was a tumultuous period but the changes have driven turnover from £75m to £145m, and increased profitability.

Finance director Rob Ross asks his team to provide analysis alongside regular reporting to increase their understanding and make it more accessible to other staff in the business. He focuses on details in their presentation too, such as the importance of labelling graphs and putting commas in millions.

Financial reporting and meeting schedules

Accounting professionals that advocate the need to increase financial literacy build routines to help embed conversations about finance.

“We have 40 profit centres,” explained Ross. “We have to have it fully reconciled and understand where we make money. If we don't make money in five profit centres we have monthly meetings with the managers and we go through it and through it until that profit centre is making money and it drops off the naughty list.”

These meetings sit alongside regular events. Each is used as an opportunity to encourage staff to understand and interpret the numbers, Ross added.

It’s easy to see how a CFO has more opportunity to improve financial literacy than someone from an accounting practice. But Bulpitt’s conviction shows potential for practice professionals too.

The benefit of helping staff understand financial metrics and the role they have in impacting business performance seems obvious. The long-term trend of accounting professionals playing a more advisory role provides a natural opportunity to increase their impact on financial literacy whether or not they’re a full-time employee.

About Chris Goodfellow

Chris Goodfellow

Journalist and editor with eight years' experience covering politics and business. His work has been featured in a range of publications including The Guardian, The Financial Times, The Independent, the BBC and Vice magazine.


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