The Crucial Role of Communication in Accounting and Finance

Finance is often perceived as an administrative function that incurs costs without directly generating profits. However, this view is shortsighted. Every aspect of an enterprise flows through and ultimately converges in finance. It serves as both a limitation, by setting budgets and targets, and a source of growth, by enabling investments and improvements. Finance is about results, movements, and informed decision-making. Therefore, the finance function must establish effective communication channels to bridge the gap between financial figures and business operations.

Breaking Down the Silos: Finance as a Business Partner

For finance to provide real value, it cannot operate in isolation. Finance should not be seen as a restrictive force that merely imposes financial controls but as a strategic partner that supports the business. A finance function that is disconnected from the day-to-day realities of the company risks producing reports that lack relevance and actionable insights.

To integrate finance into the business, finance professionals must actively seek information from all departments. Instead of just demanding data, finance should facilitate a two-way exchange, gathering timely, relevant information and providing insightful analysis to stakeholders. Finance professionals should step out of their offices and engage with different teams to understand the operational realities behind the numbers they report.

Seeing the Reality Behind the Numbers in Finance

Financial figures should always be substantiated by the physical flow of operations. The numbers in financial reports must reflect the actual state of the business. To achieve this, finance professionals must make an effort to see beyond spreadsheets and balance sheets. They need to understand the real-world implications of their reports.

For instance, when reporting on fixed asset depreciation, finance should investigate what the equipment does, how it is used, and its overall condition. If consumables costs appear in the profit and loss (P&L) statement, finance should explore how these materials are used, their necessity, and whether there is any wastage. By connecting financial data with operational realities, finance professionals can produce more insightful and accurate reports.

Communicating Effectively: Speak the Language of the Business

One of the biggest challenges in finance communication is ensuring that reports and insights are understood by all stakeholders. Business leaders, department heads, and operational teams have different levels of financial literacy. Presenting complex financial information in a way that resonates with each stakeholder group is crucial.

Finance professionals should avoid excessive use of technical jargon that may alienate non-financial stakeholders. Instead, they should tailor their communication to the audience, making financial data accessible and actionable. The goal should be to present financial insights in a way that supports decision-making rather than overwhelming stakeholders with unnecessary complexity.

Visualizing financial data can significantly improve comprehension. Instead of presenting rows of numbers, finance teams should use charts, graphs, and dashboards to make financial trends and projections easier to understand. By translating financial data into a visual format, finance can facilitate better decision-making across the organization.

Finding the Right Balance in Communication

While communication is essential, it should not be excessive. Overloading the business with frequent and unnecessary financial updates can create fatigue and reduce engagement. Instead, finance should focus on delivering timely, relevant, and well-structured reports that add value.

Finance professionals should also be mindful of the time constraints of their colleagues. When engaging with other departments, finance should ensure that the discussions are productive and respectful of their time. Meetings should be concise, with clear objectives and actionable takeaways. The focus should be on collaboration, not bureaucracy.

Consistent and Transparent Reporting

Finance teams should establish a clear reporting structure that keeps all stakeholders informed about the financial status of the business. Regular updates on project statuses, financial performance, and budget tracking should be shared transparently. This ensures that all teams have the financial insights they need to make informed decisions.

Transparency in financial reporting fosters trust within the organization. When finance teams proactively share insights and highlight potential risks or opportunities, they position themselves as valuable advisors rather than mere number crunchers. This proactive approach enables the business to address financial challenges before they escalate.

Respecting the Business’s Perspective

Finance professionals must also recognize that their role is to support the company’s overall goals. They should approach their communication with an understanding of the broader business objectives. Instead of being perceived as enforcers of rigid financial policies, finance should demonstrate that they are enablers of growth and efficiency.

By demonstrating empathy and understanding of business challenges, finance professionals can build stronger relationships with other departments. Actively listening to teams’ concerns and providing solutions that align with their needs—while ensuring compliance with ethical standards, company policies, and overall goals—can transform finance into a true business partner.

At times, team interests may not align with company policies, often due to a lack of awareness of ethical and professional obligations that finance must uphold. In such cases, transparent communication, along with proposed alternatives that offer a reasonable compromise, can be highly valuable.

For example, a departmental manager may request to postpone costs to the following period due to budget overspending in the current period. However, finance must ensure that costs and revenues are recorded in the correct period, as manipulating them would be unethical and non-compliant.

In such cases, finance can explain to the operational manager why this is not possible while offering support in justifying the overspending. Additionally, they can propose a catch-up plan for future periods to ensure total costs remain within budget limits. This approach not only upholds financial integrity but also fosters a positive and collaborative relationship.

Building Relationships: A Matter of Respect and Collaboration

Building relationships is not about being nice and comfortable with people and making an impression of the person with whom it is a pleasure to drink a cup of tea. It is not what finance people should adhere to. Sometimes, this term is misunderstood by a wider audience. If a finance leader is focused and a bit reserved—which is inherent to the profession—it does not mean they lack good relationships. We are all at work and have our own goals. Good relationships are built on the basis of respect and collaboration, not personal sympathy. Everyone is different in this world, and professional relationships should be based on mutual understanding and shared objectives rather than personal preferences.

Conclusion: Finance as a Strategic Enabler

Effective communication is at the core of a successful finance function. Finance should not be seen as a department that simply demands compliance and controls budgets but as a key enabler of business success. By integrating finance into the broader business landscape, substantiating financial figures with real-world insights, and tailoring communication to different stakeholders, finance professionals can add significant value to the organization.

To achieve this, finance teams must be proactive, engaging, and transparent. They must step beyond the numbers, understand the business, and communicate financial insights in a way that drives informed decision-making. By doing so, finance can strengthen its role as a strategic partner and contribute to the overall success of the business.