Reporting financial performance to business stakeholders

The stakeholders of finance are individuals or groups who have a vested interest in the financial decisions made by the organization. It is essential that the person responsible for leading finance provides regular finance updates and safeguards the interests of your stakeholders.

Most companies will regularly update their stakeholders on the following matters:

• Financial performance of the organization
• Cash flow and financial position at a point in time
• KPI (“Key Performance Indicator”) performance trends
• Long-term investments and future financial plans
• Key milestones achieved by the organization

Finance needs to manage many different types of stakeholders, each with their own interests and agendas. It is essential to identify and understand these different groups to engage with them effectively. Most finance functions, typically led by the CFO (“Chief Financial Officer”), have the following stakeholders:

A strong CFO possesses robust knowledge of the company’s strategy and can confidently articulate this to both their team members and key stakeholders. They are fully aware of the activities taking place across the board and know exactly how to provide vital support to each team leader.

A key component of high performance is connected to how well your finance team can identify and build strong relationships with your internal stakeholders. This allows you to create clear goals around their needs and to hold your finance function accountable to them. These objectives provide your finance team with an opportunity to redesign the way things get done and to become more efficient as they serve them.

Your external stakeholders may include shareholders, investors, banks, customers, suppliers, professional advisors, auditors and regulators. It is important that the CFO manages each relationship effectively to maintain positive relations, support the success of your business and keep them updated on the progress of your company.

Here are some questions to ask yourself:

• Which stakeholders do finance typically interact with the most?
• How well do they manage each of these relationships?
• Do they need to improve their relationships with any of them?
• What are their likely perceptions of finance and how does your finance team make them feel?
• How often does your finance team put in extra effort to add value and exceed their expectations?

Your finance function is the face of your business for many external stakeholders. The way that they interact with them will have a huge impact on their perception of your company. It is vital that you create strong and long-lasting external relationships from these interactions.

To develop a strong reputation, you need to provide a great service to your stakeholders, obtain positive feedback from them, and leverage from their knowledge, expertise and wider networks. During your communications, you need to demonstrate your team’s capability and generate people’s confidence in both yourself and your leadership team’s ability to deliver the business plan.