The world of investor communications has changed dramatically over the past decade with investors of all kinds demanding more transparency, better forecast accuracy, and real-time insights that can be used to make smarter investment decisions. This is placing increasing pressure on companies that have to split their focus between improving internal operations and strategies that drive results and meeting the demands of external stakeholders who they rely on for funding and support.
To meet this dichotomy, FP&A software has become indispensable – allowing teams to deliver more sophisticated financial narratives while maintaining accuracy and compliance. In this article, we’ll examine what this looks like in practice and offer some advice as to how companies can use the Apliqo suite of solutions to improve their overall investor relations.
Why are investor expectations changing?
Perhaps the biggest societal shift driving an increase in expectations has been the democratisation of financial information and education. Retail investors now have access to professional-grade analysis tools and have thus started to expect similar levels of transparency from the companies they invest in. Meanwhile, institutional investors are leveraging AI and other advanced analytics to scrutinise company performance at unprecedented levels of detail.
In addition, the scope of investor interest has expanded well beyond traditional financial metrics. Environmental, social, and governance considerations have become more and more important – and companies must now maintain a broader set of metrics that can be communicated effectively across a variety of channels.
To meet these expectations, companies must leverage sophisticated FP&A tools, or consign themselves to an avalanche of additional manual work that doesn’t actually drive the business forward.
4 ways that FP&A software can transform investor communications
There are four key areas where FP&A software is revolutionising how companies engage with investors:
Speed and accuracy
The ability to quickly produce financial information at a high quality is not just an operational advantage, but it is actually a crucial driver of market confidence and reputation. FP&A solutions can assist with this by enabling a number of key capabilities that speed up reporting of all kinds:
- Automated data consolidation. FP&A software can be incredibly transformative in terms of its ability to eliminate manual data collection and automate things like currency conversions while also integrating seamlessly with other ERP systems and data sources. Once these data pipelines are set up, the speed improvements can be significant.
- Real-time updates. If you have a unified FP&A setup, you essentially have a live connection to all your underlying financial systems that enables automatic updates to reports and presentations as well as real-time tracking of performance against benchmarks. This means that you aren’t starting from scratch every time you have an investor request. You are always up-to-date and well-positioned to create reports that are timely and accurate.
- Error reduction. Solutions like Apliqo come with built-in validation rules, cross-checks, automated reconciliations, and standardised calculations that all work to minimise errors and identify anomalies. Having these proactive checks works wonders for improving overall throughput and avoiding timely backtracking that can slow down reporting processes.
- Version control. A single source of truth, as can be achieved with sophisticated FP&A software, offers a clear audit trail of all changes and updates without the need for tedious version control. Teams can work collaboratively on the same data with controlled access and permissions helping to ensure that the right support is in place.
Enhanced visualisation
The ability to present complex financial information clearly and compellingly is crucial for effective investor communication. FP&A software elevates this capability through:
- Interactive dashboards. Solutions like Apliqo UX allow for dynamic visualisations that automatically update and allow users to drill down from high-level metrics to the underlying details. These dashboards can be customised for different investor segments and can be built to incorporate not only financial information but other metrics that support a specific narrative.
- Generating custom reports. While standardised reports are useful in a number of contexts, having the ability to create custom views and reports quickly and efficiently can be a game changer. Powerful FP&A software can do this with ease, combining multiple data sources into single views that are useful and flexible.
- Presentation-ready graphics. An underestimated aspect of investor relations is being able to generate graphics that tell your business story accurately while still being consistent with brand guidelines and quality standards. Ideally, you want your software to have global best practices for design built right in so that you can spend your time on the analysis and not on graphic design fixes.
Scenario planning
Investors expect companies to be able to demonstrate robust planning capabilities that show how sensitive the organisation’s key metrics are to changes in important variables and inputs. Your FP&A software needs to be able to handle this sort of scenario planning so that you can deliver dynamic forecasting capabilities that clearly communicate your assumptions and results.
In addition, you also need to be able to use these forecasts to evaluate risk because that is a key component of any investor-facing communication. Showing thoughtfulness and realism in this risk analysis process builds confidence with external stakeholders and helps to manage expectations in terms of what the company is capable of, subject to external factors.
From here, you can develop mitigation strategies and use those to handle any investor objections that come your way.
Compliance and control
Maintaining regulatory compliance and internal controls is paramount in strong investor communications and FP&A software strengthens this capability in a few ways:
- Audit trails. With the right software, you’ll have complete documentation of all changes, a clear record of approval processes, and time-stamped versions of all materials that can be used to provide evidence for internal controls.
- Data governance. Having all your financial data in one place with standardised definitions and calculations makes data governance a lot easier. You can focus your resources effectively and ensure consistent application of accounting policies while also protecting access to sensitive information.
- Regulatory compliance. More directly, you can build compliance checks into your system and automate specific disclosures that you know you need to produce on a regular basis. Having quick access to these supporting documents goes a long way.
- Access controls. Sophisticated FP&A software uses role-based permissions that control the sharing of sensitive information and protect key intellectual property without constraining or slowing down routine FP&A processes.
When you combine these four factors, it’s clear to see that powerful FP&A software can completely transform how you engage with investors in a myriad of different ways. It’s an enabler that can make your life a lot easier and build confidence and loyalty amongst your external stakeholders.