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Create a Process for Effective FP&A Communication

Mike Triantos
Posted by Mike Triantos on Jul 5, 2023 1:54:53 PM

In our last article, we laid out a powerful technique for delivering value in FP&A services: Financial storytelling.  

Financial storytelling is when an accounting advisory moves beyond the numbers and provides a contextual narrative that is meaningful and relevant to the client.  A common mistake in delivering CAS is thinking it means providing visual reports, then having a conversation about what’s happened.  

You need a process for financial storytelling 

FP&A services go beyond reporting and are a relationship-driven process of mapping where a business is going in relation to its target with a strong feedback loop to stay on track. It means looking forward — providing scenarios and equipping a business owner with the tools they need to anticipate and make better decisions. 

The most valuable services involve coming alongside your clients and giving them a visual of their financial model with the key drivers that will determine success. While this is a huge leap in value compared to traditional rearview accounting services, it doesn’t have to be a massive change in your workload. You just need the right process. 

In this article, we’ll go a step further, and walk through a proven process for delivering a narrative-driven advisory service. 

Start with understanding 

With advisory services, it’s tempting to take the financials and quickly jump into making comments or recommendations. Doing this is a mistake because storytelling requires understanding.   

You need to know what matters most to your clients, and what their goals are before you can draw any conclusions from their data. Just like a doctor, you need to diagnose before you can prescribe.  

Start by asking questions to the client, then stop and listen.  

  • Learn where the client is, and where they want to go 
  • Determine their revenue drivers 
  • Understand the related costs 
  • Map about how the business operates 
  • Create the blueprint for your model  

Getting past your assumptions and into the day-to-day of your client’s business will help you not only build the financial model but to provide depth in your ongoing client communication. 

Next, build the model  

Once you understand your client’s goals and the key drivers in their business, you can roll forward a forecast mapping out what needs to happen to go from point A to B.  

Your financial model will work as the basis for ongoing dialogue as you’ll be able to compare where the client is to where they are going.  

The model is dynamic and will include:  

  • Key revenue drivers 
  • Cost drivers 
  • Assumptions as stated by the client 
  • Budget to actuals for quick adjustments  

Key point: Your model allows you to look forward. FP&A is not simply taking what happened and talking about it. You are building a model 12-18 months into the future, so you can monitor leading indicators to ensure targets are met. 

Create a meeting rhythm  

In your advisory meetings, the frequency of meetings will differ from client to client based on their preferences. But at the beginning of your FP&A relationship, it’s important to review the model often. 

The reason is that this is the first time you’ll start testing assumptions, and it’s entirely possible you’ll need to make adjustments.   

After you’ve had 6-months of actuals to compare in the model, you’ll be much more confident in the data. In the beginning, you want to make sure you are ahead of any incorrect assumptions.   

Establish a meeting rhythm with all your clients so that there are no surprises. It’s actually Ok to have bad news if you’re looking forward. The real problems come when there are surprises, and it’s too late to make a change. 

Identify the actual key drivers  

Your key drivers are the 4-7 data points that have the greatest impact on whether or not your client hits their targets. Your role as a trusted advisor is to simplify. If you provide too much data, it’s not helpful to the client.   

When you have some actual results in the model, you should be able to start pulling out which data points need to be watched closely.   

Then as you continue in your meeting rhythm, you can center the conversation around these key drivers.  

Tell the story 

Remember, everything ties back to your client’s goals and desires. Financial storytelling is providing a narrative for what is happening in the real world against their assumptions.  

There is a story of the expenses in your budget forecast.  

There is a story of revenue in your budget forecast.   

You need to tell your client their profit story, and their cash story. You will tie these back to their key drivers, and the client can see with extreme clarity why they’re getting the results they’re getting.  

Establish this process, grow your firm  

Once you have this process nailed down, clients are going to be thrilled. You are giving them exactly what they want. They have a visual model, mapping them toward their goals, and accountability to stay on track.   

Delivering this process with a story is where accounting firms need to go. The more confidence you gain, the more you’ll have clients thrilled with your services. 

Topics: Financial Advisory


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