Financial connection, continuity and confidence in your organisation

How does financial information in your business or organisation filter through to the various people whom it affects? Is there a good and appropriate connection to financial insight across the board?

Vision and connection

For those of us who spend a lot of time with our head in the accounts, it can be easy to forget that our teams (and even our leaders) can have very little idea of what is happening in business finances.

Not that every team member needs (or wants!) to know all the nitty gritty, but lack of appropriate and regular information could mean a subtle but growing disconnect of our teams from how finances can be serving the vision of the business.

Where we have great team wanting to grow the business, we want to facilitate their enthusiasm, rather than create or keep obstacles. Where there is a breakdown of effective communication it can lead to increased difficulty for team to see how the finances are relating to the bigger picture.

So, where appropriate, perhaps consider communicating finances in the context of vision and growth. It’s a different experience (perhaps heavy and negative) when there’s a financial crisis due to overspending and lack of financial foresight. But if, for example, communication is strategic and looking ahead, this can help keep everyone on the front foot. It may be beneficial to consider keeping your team regularly up to date on some key financial figures, perhaps even having a policy in place for when escalated or seasonal communication would be appropriate and helpful.


Viability and continuity

One of the biggest financial misunderstandings (and hence miscommunications) that can occur in businesses is in the area of what we’ll call “cash position” (or “cash viability”).

To explain this, we need to understand that as a business makes money, some of these funds need to be reserved for upcoming expenses or liabilities. These expenses and liabilities may be coming up at different times, and in some cases may only be an annual occurrence.

When these upcoming expenses and liabilities are not well understood or recorded/reported, an unfortunate situation can occur – the business bank account may look well resourced, but the overall financial position of the business could be dire and desperate.

To put it simply, obvious financial figures like the bank balance and the level of sales may not be very good indicators of your business’s actual financial position. In fact, they could give a false impression of a healthy situation, when in fact the business may owe more funds to others than it has in cash balance (and is in a decidedly unhealthy financial state).

Further to this type of misunderstanding in financial position, the situation can be exacerbated when there is lack of continuity and consistency in those able to helping with the finances.

With the demands of modern life, turnover in finance positions (like your bookkeeping or admin staff) can be higher than desired, and unexpected changes can cause a break in information flow. Moreover, the learning curve involved in financial roles can mean there is a “reinventing the wheel” situation when it comes to effective and helpful financial processes.

Understanding this important area and having consistent and ongoing attention given to it can greatly assist in beginning to see financial “red flags” ahead of time.

Confidence and growth

One thing we truly want to avoid is an unaddressed lack of confidence or even lack of trust in the way business finances are being handled.

Here we are not just meaning recklessness or misappropriation of funds (these are clearly important, but not our topic here). Rather, we want to avoid a scenario where a lack of analysis, planning or communication leaves team feeling unhelpfully confused or uncertain as they try to go about their roles.

Perhaps on the more undesirable end of the spectrum would be the regular emerging of unexpected (but foreseeable) financial crises. Perhaps you’ve seen it before – by the time the situation is understood and communicated, it’s already very serious. Rather than having a warning period and time to plan, business leaders and teams are thrust into a financial emergency.

Such occurrences could lead to a concerning level of uncertainty, and staff may start to question the stability of their employment, and how much lead time they will receive if they need to be let go in a crisis situation.

What can be done to support confidence and growth in a helpful way?

Would you like to explore further topics related to bookkeeping and payroll in your business or organisation? eBook available now:

Your Handy Overview of Strategic Bookkeeping and Payroll

(including your 80+ point Bookkeeping and Payroll Management Overview Checklist)

This overview aims to provide a useful and helpful big-picture view – to assist you in further developing the financial function in your context. Designed for business owners, organisational leaders and teams.

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