Guest Blog - How to Read Financial Statements

We are delighted to introduce a series of Finance related blogs, written by Ted Wainman. Ted is a trusted partner of the LMA, bringing a wealth of knowledge and experience to our delegates. We hope you enjoy these blogs, published weekly.

Paul Davenport
Finance Director

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27 April 2021 | 10-minute read 

It is amazing how quickly we specialise in our roles. Specialisation is a good thing – just ask Adam Smith (he of the ‘invisible hand’), yet the danger is that we lose a sense of ‘perspective’ and of the ‘big picture’. Even the finance team can become lost in the implications of IFRS 17 and forget about the big picture – the financials outside of their immediate role.


 
"Not only must we bring technical knowledge, we must also bring a commercial understanding of our business and our industry.”

And yet, as financial professionals, not only must we bring technical knowledge, we must also bring a commercial understanding of our business and our industry. To be able to influence, we need to project warmth and strength (think “do I like you; do I trust you?”). Building trust is not only knowing the minutiae and the detail of various accounting standards, but also how those accounting standards all add up to the big picture.

So, the ability to be able to read a set of financial statements produced by an insurance company is a key skill – and not only to be able to read the accounts, but to be able to interpret and explain to colleagues (who, incidentally, do not speak the language of finance).

I know the challenges faced by the finance team in any organisation. “Only there to authorise my expenses claim” was an unfair charge often levied at my team. So how to change this perception? Change from re-active to proactive; from introvert to extrovert; from technical to commercial. Start with the big picture and work backwards, not always with the detail and work forwards. And finally, educate your (non-financial) colleagues. Don’t always expect them to change their attitudes – you have to actively change their attitudes for them.

And on to the financial statements. A great way to invest in your own ‘commercial’ skills – reading and interpreting the big picture, as well as making sure the trial balance balances!

I am delighted to be partnering with the LMA to deliver several new programmes being delivered virtually as part of the Finance Academy.

To find out more about the Finance Academy and the new offering, please visit the Virtual Academy.

Ted Wainman
Talk Financials Ltd
www.talkfinancials.com