Demystifying the mystery of numbers

Always entertaining and with a unique ability to connect to her audience, Kathy shared that she wasn’t always comfortable with numbers herself. At school, she was reasonable at maths, “Maths is like a muscle, the more you exercise it, the stronger it gets,” she says, but she was more interested in poetry and art at that stage of her life, which is probably why she approaches numbers as a story.

Her past definitely shapes how she works with NFP leaders. Her philosophy is simple: don’t let the terminology intimidate you. You probably understand far more about finance than you think.

A strength of Kathy’s approach is to take accounting concepts that sound complicated and connect them to everyday experiences. Cash versus accrual accounting is a great example. We have previously explored this in our article, Cash vs Accruals: What is the Difference?, but Kathy has an even simpler way of explaining it.

Imagine going to dinner with friends. Kathy pays the bill, but you don’t transfer your share until the following month. Under cash accounting, the movement is recorded when the money changes hands. Accrual accounting recognises that your expense actually occurred when you had dinner, regardless of when you paid Kathy back. It is a simple analogy, but that is the point.

Accrual accounting hasn’t suddenly become less sophisticated. You have simply connected an unfamiliar accounting term with something you already understand. As Kathy told webinar attendees, “Don’t be put off by the terminology. You already know these concepts; it’s just about attaching new labels to them.”

For sector leaders, understanding financial reports isn’t about becoming an accountant. It is about becoming secure enough to ask questions.

Why are employment costs above budget? Why has our cash position changed? Have we received funding in advance? Can we comfortably meet upcoming commitments? Why is this figure significantly different from last month? And the big question, does the financial story match what I know is happening in our organisation?

Kathy encourages leaders to start with the story rather than becoming lost in individual numbers. If you know your organisation purchased equipment, employed additional staff or experienced delays in funding, those events should appear in your financial picture.  Being transparent about your expenses will make the outcome easier to understand. This shift in thinking can turn financial reporting from something intimidating into something genuinely useful.

It is important as a “Responsible Person” in the organisation that you have a grasp of the figures, but improving your financial literacy doesn’t mean charity leaders have to navigate their finances alone.

An outsourced CFO sits alongside your CEO, management team, and board, helping translate financial information into what it means for the organisation. What are the numbers telling us? Where are the risks? What has changed? Are we financially sustainable? Do we have enough cash for the upcoming commitments? Are we tracking towards the budget? What decisions should we be considering now?

Financial reports then become more than historical records. They become tools that help leaders monitor performance, positively influence outcomes and forecast what may happen next. The outsourced CFO provides expertise and perspective, but Kathy is very clear about one thing: they don’t take the responsibility for financial decisions away from leadership.

An external finance provider can advise, guide, challenge and act as a gatekeeper, but the decisions remain with the organisation. And that makes understanding the numbers an essential function of the leadership team.

At the start of Kathy’s webinar, attendees were asked how they felt about reading financial reports. The feedback ranged from bored, terrified and confused at one end to fascinated, confident and empowered at the other.

That journey from overwhelmed to empowered captures what good outsourced CFO support should achieve. At Accounting For Good, our job isn’t to impress clients with accounting terminology or simply hand over another financial report. It is to help charity and NFP leaders understand what is happening behind the numbers, ask questions and make well-informed decisions about their organisation.

You don’t need to love spreadsheets. You don’t need to know every accounting rule. And you certainly don’t need to pretend you understand something when you don’t. Often, you simply need someone who can take something that feels mysterious and explain it in a way that makes sense. The numbers are a health check for your organisation, and that means accurate data in creates accurate data out. Our role is to help you interpret what the data means.