Communication is an unavoidable and crucial aspect of any business’s operations. It is especially important to communicate well. But this isn’t easy, as it’s a more nuanced skill than people may realise. In the world of finance, some may dismiss its relevance, and will perhaps argue that finance teams can get away with being less personable due to the analytical nature of their roles.
However, these roles are becoming increasingly collaborative and wide-ranging. Not only this, but communication itself is evolving too thanks to technology.
In this article, we explain the importance of communication within finance and highlight some finance-specific communication skills that can be honed. We also provide some tips on how to communicate effectively and discuss the financial benefits that come with this.
Importance of communication in finance
Managers can better understand performance
When data can flow seamlessly throughout a finance team, it ensures everyone has visibility over the company’s financial performance. The finance function is multifaceted, so if these separate components are not synchronised, it’s likely there will be an incomplete view of the metrics that really matter. And it is these metrics that influence the changes a manager will implement.
Directors are better positioned to guide strategy
The quality of communication doesn’t just dictate the flow of information through the team horizontally, but vertically too (to those higher up the hierarchy). Today’s CFO has a big part to play strategically, assisting the CEO with big decisions. If they only have access to outdated performance data, the CFO will be going into board meetings with insights that are no longer accurate.
Stakeholders are kept in the loop
A key stakeholder might include an investor, lender, supplier, or other shareholder. There should be an open line of dialogue from the finance team to these influential individuals. The success of these relationships can affect aspects like cash flow, budget, and the general resources a business has access to. It also helps to remove any ambiguity or speculation that might otherwise cause a shareholder to invest their money elsewhere.
Customers have full awareness
When a sale is made, customers should be made fully aware of the terms (such as the amount they must pay and when they must pay it). Failing to provide this information could lead to late/missed payments which could harm revenue. Any customer-facing employee in the finance team should be well versed in how to speak to customers so that they don’t negatively impact future sales.
Employees have full understanding of processes
Every business has a unique way of doing things. Finance managers should ensure there are methods for communicating processes to new employees (or process changes to existing employees). This would ensure that a new starter would know exactly how they should log an expense claim, for example. It also helps to maintain consistency and allows all staff to know what is expected of them daily.
Compliancy is maintained
Whenever some financial legislation is changed or introduced, everyone should be made aware of this in an effective way, as they will ultimately influence whether the company remains compliant. They should also be given the tools needed to contact the appropriate governing bodies, if, for example, they must submit taxes in a compliant manner.
Communication skills for finance professionals
The skills of any finance professional are usually broken up into two types, hard skills (which are extremely specific to their role) and the following soft skills (for everyday communication):
A report is a compilation of information that has been packaged to be relevant to a specific audience. It is a form of communication, as it involves one employee taking some insights they have found and giving this to colleagues in an understandable way. When finance workers have mastered the craft of reporting they can make it easy for others to comprehend the company’s financial health.
Presentations can achieve the same outcomes as reports, but via a different format. It allows those presenting to communicate verbally rather than simply showing stats on a document. Different forms of communication can be better or worse depending on the objectives and the preferences of the recipient. Finance workers may have to go into more depth and expand upon the information seen in reports when talking to stakeholders. Presenting allows them to be more expressive.
Meetings allow teams to maintain transparency and cohesion. Too many meetings can hinder productivity, but it's important to at least touch base at the start/end of the week to set objectives and overcome any barriers. With technology allowing teams to conduct meetings in new ways, it’s important for employees to grasp these tools and to understand the nuances of digital communication.
A one-on-one interaction is usually more direct and personal than a presentation or meeting. This could be two colleagues collaborating on a project, or a manager having a monthly performance review with their employee. The need for interpersonal skills may be underestimated in the finance realm, but by honing their empathy and emotional intelligence, individuals can get more out of these interactions and be more successful generally (as it’s very unlikely anyone can achieve their goals in pure isolation).
The written word can be just as effective as spoken language and pure numerical data. An email can sometimes be the best way to explain what you’re trying to do. And sometimes it may be the only way to communicate (if the other person is in a different geographic location). If those in finance cannot write well, they could end up confusing matters, leading to the wrong outcomes or delayed processes.
What are the financial benefits of effective communication?
Teams can simply produce more when they’re able to connect with one another. Plans can be made, responsibilities can be distributed, tasks can be actioned, bottlenecks can be tackled, assistance can be requested, and projects can easily progress from one step to the next. Efficiency is higher too, resulting in less downtime and greater cost-effectiveness.
Wide-ranging knowledge among employees
If employees within the finance team are heavily focused on their specific duties, there is a danger they could become isolated from the rest of the business. However, when cross-departmental collaboration is encouraged/enabled, they gain a greater understanding of the wider business. This means that the company gets more value for money in terms of the salary paid, and these individuals have an enhanced perspective when analysing financial stats.
Interconnected departments doesn’t just lead to more knowledgeable staff, it can create a better quality of data too. When teams work in silos, it can result in multiple versions of the truth. One department may go completely overbudget as they’re working off the wrong set of numbers. However, with clear and concise communication, there can be a single (and up to date) version of the company’s financial reality. Good data means better decisions and better performance.
Improved career progression for staff
Those that are willing and able to be part of the wider conversation are inevitably more visible to those they work with and those higher up the business. This means they’re more likely to enter the thoughts of hiring managers when new internal opportunities arise. They’re also better placed in terms of promotions and training opportunities. Career progression can lead to improved fulfilment and motivation.
Greater customer satisfaction
As previously discussed, there are instances when those in the finance team will need to converse with customers/partners. If a customer has a seamless experience in these scenarios, there’s a greater chance they’ll view the business as competent and be satisfied with the service they are receiving.
How to improve communication in your finance team
Listening is a crucial part of communication. After all, it does make up half of any two-way conversation. When employees are only concerned with their own perspective, they may miss opportunities to broaden their horizons. It’s also much easier to reach desirable outcomes when you can better understand the true feelings/concerns of colleagues and stakeholders.
Think about the audience
It’s important to think about the recipient of any communication, as this won’t just influence the type of communication you use, but the contents of it too. Some stakeholders will be happy to receive long lists of numbers in a standard table, whereas others will be more responsive to images, graphs, and other forms of media.
Schedule regular contact
Finance managers should look to schedule contact within their team at consistent intervals. By having these regular touchpoints, their team will know exactly when they are obligated to meet, and as a result will be less likely to miss important updates.
Businesses should look to provide any relevant training that will enhance the communicative capabilities of their workforce. This could be the latest soft skill training within the industry, or tone of voice training so they know how to represent the brand to customers. Recruiters should look to prioritise good communication skills when hiring too.
Liberate your team from repetitive work
When employees are bogged down with repetitive data entry, they may not have time to prioritise teamwork. However, when they’re not just limited to number crunching, they can proactively seek out colleagues, and take a collaborative deep dive into the more complex data analytics. The automation of many financial tasks is now a real possibility thanks to technology, and it’s these digital systems that can liberate staff to communicate better.
Implement the latest communication tools
There are also digital systems (such as Microsoft Teams) that are specifically designed for instant messaging, virtual meetings, and enhanced communication generally. These technological tools have become increasingly common following the shift towards remote/hybrid working, with workers needing new ways to stay connected. With this approach, there is no need to wait for someone else to check their email, as they can be contacted straight away. And files can be sent back and forth in many formats.
Embrace Cloud technology
It’s not just direct communication that assists with staying connected, but the way people work too. Cloud technology has enabled employees to complete tasks in any location and at any time. This means that when they make an update to financial data, their colleagues are more likely to see this in a timely fashion. For many finance teams, Cloud-based accounting software has replaced more traditional accounting methods like spreadsheets and paper.
Using technology to improve communication
At Advanced, we provide a Cloud based accounting solution called Advanced Financials. This software has dedicated functionality for accounts payable/receivable, credit management, purchase management, expense management, asset management, bank reconciliation, and much more. With the entire finance function completing their work in a single digital space, there is one unified version of the financial truth. And as updates can be made in real-time, the data is more accurate too.
Advanced Financials helps to automate many typical finance tasks, allowing the team to have more collaborative time, so that they can drive the business forward in transformational ways. The system has built-in dashboards, allowing the CFO to gain an instant overview of performance, which they can then feed back to the wider board. And with over 1,000 customisable reports, employees can instantly compile the stats they need, and easily communicate this information to others.
Are you looking to improve communication within your finance team via the help of Cloud access, streamlined tasks, and centralised data? If so, be sure to take a closer look at our Cloud-based accounting software.