Financial Storytelling

Definition of Terms

Finance departments no longer focus solely on calculating key metrics for accounting, financial planning, or financial reporting. They now have a broader scope of responsibilities and are no longer confined to back-office functions. In addition to data analysis and strategic optimization, their new responsibilities also include financial storytelling.

But what does the term mean? Financial storytelling builds a narrative around the numbers associated with a company’s growth. In doing so, it highlights the value of financial metrics and communicates them effectively throughout the organization. Financial storytelling is based on data and a comprehensive understanding of how to interpret that data within the context of the business. By contextualizing financial data, it bridges the gap between the finance department and both internal and external stakeholders. Automation plays a central role in interpreting the data, enabling the CFO or the Controlling department, among others, to access data in real time and generate reports quickly and conveniently. The goal of financial storytelling is to provide relevant insights, for example, into new business opportunities.

To tell stories based on financial data in a way that is both understandable and engaging, executives such as CFOs or heads of finance can ask themselves the following questions when preparing the data:

• Which parts of the data are particularly helpful?
• What is the story behind the data?
• What would pique the interest of senior management or other stakeholders?
• What new opportunities does the information reveal?‍

It is important to understand the target audience

‍Forcommunication to be successful, it must be clearly understandable to the intended audience. Not everyone in a company knows how to interpret numbers. The focus of the story and the associated metrics must be tailored to the audience’s needs. For example, the board of directors, investors, employees, and the general public usually have different perspectives on the company’s financial figures. It should also be kept in mind that financial storytelling is not solely about financial data; it must always be viewed in the context of corporate culture and both external and internal challenges. This should be taken into account when adapting communication to the respective audience.