Financial communication strategy

You will most often hear of financial communication referring to companies in the CAC 40 that disclose sufficient information about earnings and cash flow so that investors can make informed investment decisions. However, financial communications are also important for small businesses. If your managers and employees understand the challenges and financial possibilities of your business, it will be easier to involve them in the changes and adjustments. They will also feel more engaged because they will have a better overview.

Financial communication is important to a business because it helps employees understand company policies and make informed decisions.

Financial communication and open books

Open book management is the ultimate expression of corporate financial communication. This accounting approach emphasizes transparency so that employees have access to financial reports and documents that reflect the financial position of the company. This strategy also involves training employees to read and understand financial statements so that they can effectively use the information you share with them.

When your employees know how to read an income statement, they will understand better why you need to cut costs in certain areas and why you may need to steer your business in another direction. Understanding a balance sheet can help them adhere to strategies that can improve cash flow, such as managing value-added purchases and stocks.

By training your staff to read a budget, you will help them understand why you have more financial resources for payroll and product development in certain months than in others.

Financial communication and employee productivity

Any essay on workplace productivity will emphasize the importance of collecting and examining performance and efficiency data. You can measure productivity using traditional metrics and metrics, such as dividing outputs by inputs, or you can design your own ways of collecting and evaluating information using data points specific to your organization and your industry. Whether your approach is standard or personalized, you can help your staff understand the importance of employee effectiveness by presenting the information you collect in a transparent and meaningful way.

You can communicate with employees about efficiency and productivity using financial communication tools such as clear, accessible spreadsheets and training on how to read these documents.

It is also helpful to provide follow-up support, such as answering questions and encouraging conversations about what the numbers mean and how you can work together to improve performance. These discussions can help your employees feel that they are making a real contribution and that they have a real interest in lifelong learning and skills development.

External financial communication

In addition to communicating with your staff about your financial situation, your company will also be required to share this information with various external agencies and institutions. Communicating honest and complete financial information to these external entities is not only good business practice. It is also your legal obligation as a business executive.

– Tax declaration .

Your tax forms are based on the communication of financial information. Excise taxes are levied on your gross income, while income tax is calculated on your net income after deducting gross income expenses.

– Financing.

When you go to a bank to lend money to your business, you need to submit documents and figures that accurately reflect the financial situation of your business. It is in the interest of the bank to ensure that you can meet your financial obligations before making a loan, and it is in your best interest not to borrow more than you can repay.

– Investors.

Individuals and businesses exploring the possibility of investing in your business have the right to view and review the financial reports relevant to your overall financial situation as well as details of specific projects that may be of particular interest to them. It is also commercially wise to use partners who rely on fair accounting rather than wishful thinking.