Ted Needleman Contributing Editor, Accounting Today
Accountants spend much of their time educating clients on why a particular approach was taken, and what the results actually mean. You may not have signed on as an educator, but it often comes with the job.
It’s been a long time since I was in practice, but I still remember all of the times I had to explain the approach accounting takes to examining and analyzing financial transactions, or why I took a particular way of recording or reporting a transaction. I had one very successful client in particular who just had trouble wrapping his head around the concept of income versus cash-in-bank. “Why are you showing that I made $100,000 last month and I have only $25,000 in my bank account?” was a question that came up more than once. With this particular client, it was a matter of having them put down an approximate amount of their bank and stock accounts, then, in a separate column, listing other things of value that they had such as their house, car, jewelry and the like. Once the client had done this (quick and dirty), it was just a matter of liking this approach to their balance sheet. It seems rather obvious if you understand how a balance sheet operates, but a great many clients, even wildly successful ones, don’t.
Many of us forget that how and where a transaction is classified and recorded, or what a report or statement actually shows, isn’t all that intuitive. You’ve taken years of classes, and had more years of experience, to get to the point where at least some of this stuff makes sense. Your clients, for the most part, aren’t as lucky (unless, of course, you’re dealing with a CFO or other employee with a financial background). And if you think about why you subscribe to one or more research services, you’ll realize that the way you handle a transaction today might not be the way the same transaction is handled tomorrow. And if that sometimes seems confusing to you, think of how much more confusing it must be to a client.
You put in a lot of time and effort staying abreast of how to pin down the moving target that accounting and reporting can often be. But that’s not the end product. Presenting a report, financial statement, or an amortization or depreciation table is not the end point of your dealing with a client. Making sure that the client actually understands what those figures represent, how you got there, and what the report itself means to their business is the actual goal.
The bottom line is that presenting, no matter how graphically impressive it may be, is not the same thing as explaining. All the infographics and charts in the world are worthless if the client doesn’t understand not only what they represent, but the part these offerings play in helping your client make decisions. A spreadsheet with projected sales, revenue, and earnings over the next five years may look impressive, but unless your client is fairly financially sophisticated, it might be more confusing than helpful. And it’s very easy to get caught up in the process, rather than how it will affect the client and their business.
There’s no one approach that’s universal in solving this problem. And there are a lot of variables to juggle, including your own understanding of not only what’s happening, but why it’s happening. You simply can’t explain something that you don’t completely understand to a client who has little of the expertise and background that you do. And, to be truthful, sometimes the way things are done simply don’t make much sense.
One approach you may find useful is to start at the bottom line, and then explain how you got there and what the steps along the way mean and affect not only the particular report, but also how these affect the business and the decisions that have been made. This top-down approach often makes how you came to the result easier to understand.
Regardless of the approach that you take, you need to be especially careful not to come across as condescending in your explanations. And there will be plenty of times where you’ll simply have to state that getting to a particular figure or set of figures is a complex process that’s been codified as a process, ruling, or code. You can pretty much be sure that if it doesn’t make a lot of sense to you, it’s not going to make sense to the client.
But try hard not to let this become your standard approach, or use this as an excuse. Keep in mind that your role is not only to explain what the figures represent and how you got there, but to make sure that the client actually understands your explanation and the impact of the report and its role in successfully running their business. Your clients engage you for your ability to understand and apply complex procedures and regulations. But unless the client tells you they are only interested in the bottom line, and not how you got there and what it means, don’t assume they aren’t interested. And there’s a fine line between being overwhelming and being informative.
Sounds good, but …
Unfortunately, there’s no easy way to attack the problem of being understandable. But if you take some time to consider what the important points of the report you’re presenting are, you can give some forethought as to some approaches that might help your client understand them.
In the past, when I’ve had to provide a report and explain what it actually meant, I’ve found it useful to go over the report or reports with a highlighter, and mark out things in the report that might be confusing or difficult to understand. Create a bullet list of these, rough out some approaches in how you might explain them, and you’ll be well on your way to creating a presentation that will be understandable and useful to the client. This approach isn’t universal, and won’t always be applicable, but if you can see the potential bumps in the road, you can do your best to avoid them.
