How can you make financial reports understandable for all stakeholders?

1 Know your audience

Before you prepare and present your financial reports, you need to identify and understand your audience. Different stakeholders have different expectations, needs, and preferences when it comes to financial information. For example, investors may want to see the return on their investment, lenders may want to see the debt repayment capacity, regulators may want to see the compliance with standards and laws, customers may want to see the value proposition, and employees may want to see the compensation and benefits. Therefore, you need to tailor your financial reports to suit your audience, by highlighting the most relevant and useful information, using appropriate language and terminology, and providing clear and concise explanations.

2 Use visual aids

One of the most effective ways to make financial reports understandable for all stakeholders is to use visual aids, such as charts, graphs, tables, and diagrams. Visual aids can help you present complex and numerical data in a simple and attractive way, by showing trends, patterns, comparisons, and relationships. Visual aids can also help you emphasize key points, draw attention to important issues, and illustrate concepts and scenarios. However, you need to use visual aids wisely and sparingly, by choosing the right type and format, avoiding clutter and distortion, and adding labels and captions.

3 Provide context and analysis

Another way to make financial reports understandable for all stakeholders is to provide context and analysis, rather than just reporting the facts and figures. Context and analysis can help you explain the meaning and significance of the financial data, by linking it to the business goals, strategies, and environment. Context and analysis can also help you tell a story, by showing the progress, challenges, and opportunities of the business, and how it responds to them. However, you need to provide context and analysis objectively and transparently, by using reliable sources, citing evidence, and disclosing assumptions and limitations.

4 Simplify and summarize

A final way to make financial reports understandable for all stakeholders is to simplify and summarize, without losing the essence and accuracy of the information. Simplify and summarize can help you reduce the complexity and length of the financial reports, by eliminating unnecessary details, jargon, and repetition. Simplify and summarize can also help you highlight the main messages and takeaways, by using headings, subheadings, bullet points, and executive summaries. However, you need to simplify and summarize carefully and consistently, by following the relevant standards and guidelines, using plain and precise language, and maintaining the coherence and logic of the financial reports.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?