Showing posts with label corporate financial transparency. Show all posts
Showing posts with label corporate financial transparency. Show all posts

Monday, May 16, 2016

Financial and Accounting Transparency

Being transparent with your business’s financial dealings can be difficult and stressful. However, it is extremely important and helpful to your business, its operations, and its overall reputation, especially if you are just getting started. Transparency doesn’t, of course, mean that you are willing to share all of your financial details with anyone and everyone, but it does and should mean that you are willing to share it with others in the company, as well as with potential investors.   


Being open and honest about your current corporate financial status, as well as your future plans related to that status can prove helpful with all of the following:

l  Attracting investors
l  Hiring good, future-minded employees
l  Bringing in clients


When you share your financial information with investors, you are showing them that you have nothing to hide, that you are not trying to scam or mislead them in any way. You are allowing them to come into your business with full knowledge of what they are getting into, and even if there are some faults, many investors will admire your honesty enough to give you a shot.

Likewise, employees want to know if they’re coming into a failing company or a bustling, busy one, and they deserve to know that. Sharing general information before hiring and more information after hiring also shows your employees that you trust them, and, in the same token, shows you which employees you can trust.

Finally, clients will be more willing to work or do business with honest companies who have nothing to hide. Yes, showing your financial situation, flaws and all, can be difficult, but it’s beneficial too, which makes it worthwhile.

What to Share

While sharing, in general, is good, too much sharing is bad.You do not have to tell everybody everything; remember that. Choose to share details that give away enough information but not too much. Things that are worthwhile and okay to share include:

l  How many users/clients you have
l  Activity level of users/clients
l  Annual revenue
l  Current and future operations plans
l  Funding
l  Losses

That might seem like a lot of information to share, but remember, NOT sharing it, especially if you’re a startup, can lead to rumors, untruths, and fearfulness about dealing with your business, which is the last thing you want.

What NOT to Share

Remember, when it comes to sharing, there definitely is a such thing as “too much information.”

The basic rule is not to share anything extremely negative and/or unfixable at the current time. If you share something negative, make sure you also share a plan for how you intend to fix it. If you haven’t yet worked out a solution for a particular problem, it’s probably best not to share that issue until you do.

The Power of Feedback


One final positive of sharing information is that you will invite constructive criticism and feedback from others who have insight into what you may need to improve on. Sure, some of that criticism may be hard to take, but, just like financial transparency in general, it will benefit you and your business in the long run.