Why data visualization is important for financial storytelling

Data is practically synonymous with the popular conception of a CFO- rightly so. As a SaaS CFO, you ensure your firm's data is accurate, organized, and effective. Yet there's another component of your role as SaaS CFO as it relates to data. You need to be able to present and interact with your data in a way that lends itself to financial storytelling.

In this article, we'll explore why data visualization is important for financial storytelling and how it can transform the way organizations report and communicate financial information. We'll show you how to revolutionize your relationship with information around you and create a compelling story that will motivate your employees and give your board the confidence it craves.

The Challenge of Financial Reporting

Financial reporting is a critical aspect of any organization's operations. It provides stakeholders with valuable insights into the company's performance and financial health. However, traditional methods of financial reporting can be challenging, as they often involve complex data sets that are difficult to interpret and can lead to delays in obtaining data driven insights.

The challenge of modern financial reporting and the rise of financial storytelling with data follow a narrative arc. For individual SaaS companies as well as the broader SaaS industry, that story arc has three distinct sections:

1. SaaS companies digitize and automate: In the first phase, SaaS firms realize the many shortcomings of manual workflows and rapidly shift toward automation.

2. Massive amounts of data are collected: Digital and automated accounting processes lead to SaaS organizations accumulating vast amounts of raw information about operations and customers.

3. SaaS leaders want to turn this raw data into stories: SaaS finance professionals see the deep potential in this accumulated data. They seek to convert it into narratives that will clearly convey the performance and trajectory of their companies.

To overcome these challenges, many organizations are turning to data visualization as a means of simplifying financial reporting and making it more accessible to stakeholders. This has all resulted in a rapid rise of data visualization as a means of financial storytelling for SaaS finance and accounting teams.

The rise of data visualization in accounting for financial storytelling

Software companies collect a considerable volume of information, which must be visually organized before it can resemble a compelling data driven story. Otherwise, it's just an ocean of numbers and information. The point here isn't to say pure information isn't useful-the point is that pure data is incomplete from a storytelling perspective.

With the advent of new technologies, it has become easier than ever for finance teams to collect, analyze, and present financial data in a visually appealing way. Data visualization tools have revolutionized the way organizations report financial data and tell their financial stories.

One of the primary ways data visualization tools are being used in finance is to improve financial reporting. By creating interactive charts, graphs, and other visualizations, finance teams can quickly and easily communicate complex financial data to stakeholders. This not only makes it easier for stakeholders to understand the information but also helps finance teams to identify trends, patterns, and outliers in the data.

Across the rise of data visualization in accounting, a few visualization tools have become common staples for SaaS financial storytelling. Some of these include:

• Role-based dashboards: Role-based dashboards are highly customizable screen views within a SaaS accounting suite that provide each member of your team with the exact data and metrics they need. One glance, no hassle.

• Line graphs: Line graphs are highly effective at displaying trends over time, whether it's customer usage data, marketing campaign results, churn rates, or any of the other countless data patterns that SaaS CFOs need to track.

• Bar graphs: Accounting teams use bar graphs to help them quickly and easily convey differences in results. For instance, say your firm uses a "mix and match" billing approach that allows users to select features a la carte. Bar graphs can show your board the real-time adoption rates on each feature.

• Pie charts: Among their many uses, SaaS finance teams leverage pie charts to easily craft visual stories around customer segmentation. A pie chart is an optimal approach if you want to tell the story of how much revenue each customer segment has contributed to your ARR or MRR.

Let's dive deeper into data visualization in SaaS finance and accounting.

What is data visualization in finance and accounting?

Data visualization is the graphical representation of data that makes it easier to understand, analyze, and interpret. In finance and accounting, data visualization tools are used to transform complex financial data into easy-to-understand visualizations, such as charts, graphs, and diagrams.

The primary objective of data visualization for accounting departments is simple: use visual tools (like the ones we discussed above) to tell a clear and concise story. These visualizations provide stakeholders with a better understanding of financial performance, making it easier to identify trends, patterns, and outliers in the data.

SaaS companies use data visualization techniques to weave narratives for three primary audiences, although others may enter the equation too:

1. Your internal teams and leaders

Data visualization is incredibly effective at helping corporate teams and department heads stay organized and motivated. Role-based dashboards are particularly helpful in this respect.

2. Your investors (and potential investors)

Data visualization enables companies to take the metrics most important to investors and weave persuasive stories with them. Why would you present dry data to your investors when you could tell them a story instead?

3. Your board of directors

Your directors expect a full accounting of the successes and failures of your organization, as well as your plans to bolster the former and fix the latter. Data visualization allows CFOs and other SaaS finance leaders to instantly and vividly see the stories behind their core metrics, sales campaigns, revenue forecasts, and more.

Now that you know a bit about how SaaS companies deploy data visualization and who they hope to help by doing so, let's step back and take in the big picture.

Why data visualization is important

Data visualization is important in financial reporting for several reasons. At an organization-wide level, SaaS firms invest in data visualization to achieve three core goals:

1. A unified understanding of data: Visual storytelling quickly gets everyone on the same page, especially when combined with a single source of truth (SSOT), allowing all team members instant access to the same information.

2. The ability to anchor your claims in facts: Telling a story with data firmly rooted in facts boosts your credibility.

3. Freedom to scale your datasets: Data visualization storytelling makes it easier to work with the massive datasets that have become the industry norm-not to mention an operational requirement-for SaaS companies.

Overall, data visualization allows finance teams to present complex financial information in a more accessible format. By identifying insights faster and communicating financial information in a clear and compelling way, finance teams can make better-informed decisions, improve financial planning, and drive business growth.

Let's look at the broader financial reporting process to better comprehend data visualization in SaaS accounting.

What is the primary objective of financial reporting?

Above all, the primary objective is to provide relevant and reliable information to stakeholders to assist in making informed decisions. This information is typically presented in financial statements such as balance sheets, income statements, and cash flow statements. Finance leaders and stakeholders rely on this information to evaluate financial health and performance of an organization as well as optimally plan for the future.

SaaS recurring revenue accounting is fast-paced, with many moving pieces and metrics. By using data visualization tools, finance teams can make financial data more accessible and understandable, helping stakeholders to make more informed decisions based on this information.

Granular financial reports help accounting teams get a solid grasp on their company's trajectory, particularly around data such as:

• SaaS metrics and KPIs

• Usage patterns and churn rates

• Customer segmentation data

• Deferred revenue waterfalls and much more

As you can imagine, data visualization is a significant component of FP&A for accounting teams and often plays a sizable role in guiding corporate decisions.

How data visualization storytelling transforms FP&A

Data visualization storytelling is an essential tool-as well as an essential skill set, which we'll discuss in detail below-for anyone involved in FP&A.

Data visualization storytelling is a powerful tool that can transform financial planning and analysis (FP&A) by enabling finance teams to communicate complex financial data in a more engaging and compelling way.

Among other benefits, data visualization storytelling allows financial decision-makers to gain clarity on their reporting and deeper confidence in their forecasts-especially for FP&A during a market correction.

What is storytelling with data for FP&A?

Storytelling with data is the process of using data visualization techniques to tell a story with financial data. In the context of FP&A, the goal is to communicate complex financial information in a clear and compelling way that engages stakeholders and drives valuable insights.

To tell a good data story, SaaS finance leaders identify key insights and trends, and then customize reports to meet the needs of specific stakeholders. This may involve weaving narratives about the past, present, and possible future scenarios-highlighting information that is most relevant to each group.

By vividly illustrating their reports and forecasts with visualization tools, accounting teams achieve maximum clarity and impact around their data. Whether you're debating hiring choices or crafting a new pricing strategy, storytelling with data will give you organized visual readouts for effective decisions.

Why do FP&A teams need to be great storytellers?

FP&A teams need to be great storytellers because effective communication is crucial in ensuring that financial information is well-understood and acted upon by stakeholders.

As we mentioned earlier, storytelling with data is a skill as well as a tool. You

should form the habit of immediately trying to see the stories behind data,

and work on communicating those stories effectively. By using data visualization tools to tell compelling stories with financial data, FP&A teams can improve communication and build credibility with stakeholders.

You should ensure your entire accounting team learns the skill of visual storytelling with data-especially anyone responsible for making presentations or communicating decisions.

Visualization of financial data - Can your finance team master storytelling?

Mastering storytelling with data visualization is a challenge because finance professionals need to have a deep understanding of financial data and analysis, as well as the ability to communicate that data in a way that is clear, concise, and engaging. In a sense, this requires a combination of technical and creative skills.

Some common challenges that finance teams face when trying to master storytelling with data visualization include:

• Selecting the right data sources: To create an effective data story, finance teams need to start with the right data sources. This can be a challenge because there is often a large amount of financial data to choose from, and not all of it may be relevant or useful for storytelling.

• Choosing the right visualization tools: There are many different data visualization tools available, and it can be challenging to choose the right ones for a particular story.

To overcome these challenges, finance teams can follow some best practices.

How FP&A teams can tell better stories with data visualization best practices

When learning to master data visualization for financial storytelling, following these best practices can dramatically shrink the learning curve:

• Communicating insights: As you become more conversant in visual storytelling with data, share your strategic insights with your team and encourage everyone to do the same. This will continuously update your team's collective understanding of its data, helping you turn raw information into an evolving story that everyone follows in tandem.

• From visualization to storytelling: Data visualization in finance is essential, but it isn't sufficient. Make sure you and your team know the detailed story behind your visuals and how to convey it effectively when needed. Visualization without storytelling-or vice versa-is only half the process.

• Know your story's purpose and target audience: Your target audience is paramount for financial storytelling with data. Always know who your audience will be and precisely what you want to communicate to them.

• Choosing the right tech stack: A cloud-based automated accounting suite can help you instantly create detailed visual financial stories for a broad range of audiences and goals. For CFOs seeking to make the most of data visualization's right potential, the right tech stack is a must.

Let's move on to some of the most effective techniques SaaS companies use to tell stories with data and use data visualization in finance.

Data visualization storytelling techniques

SaaS finance leaders rely on a handful of storytelling techniques when narrativizing data.

Here are a few examples:

• Leveraging visual finance dashboards with data visualization tools

• Automating financial reporting for detailed and crystal-clear results

• Presenting data visualization insights in a clear and concise way

• Using real-time financial reporting for instant readouts

• Investing in data visualization in finance

The time is now to embrace data visualization and storytelling to stay competitive and drive business growth. If you and your team can put these strategies to use and communicate complex financial data in a clear and compelling way, you'll be much better positioned to achieve your annual and quarterly financial objectives.

Transform financial data into valuable insights that drive business growth

For SaaS finance leaders, data visualization in finance leads to a unified, effective, and profitable enterprise. Sage Intacct gives you access to granular finance dashboards, dozens of customizable metric sets, and much more that will help your team practice storytelling with data.

Our recent ebook explores how SaaS finance leaders can embrace truly modern financial leadership. If you'd like to learn how to surpass legacy challenges and use cloud accounting to its fullest potential, give it a read.

Public link

Please use the above public link if you want to share this noodl on another website.