Mastering data communication: essential skills for accountants

Communicating data persuasively can be a tricky task. However, this is an important skill to master, as communicating figures effectively is of vital importance for accountants’ clients. In this blog post we will provide an overview of the common types of data analysis undertaken by accountants.

The four types of data analysis

There are four types of data analytics in accounting: descriptive, diagnostic, predictive and prescriptive. Accountants should choose the one that best suits their firm’s method of decision making.

Descriptive

Descriptive analysis uses raw data to highlight trends and poses the question of: ‘what happened?’. Descriptive analysis is used most often and can be deployed to classify and categorise data. This type of analysis can be used both for accountants in the creation of traditional reports and also for their clients in reporting on annual accounts or tax returns.

Diagnostic

A diagnostic analysis deals with the ‘how’. This form of analysis helps accountants to monitor changes in sets of data. Diagnostic analysis focuses on the past and helps accountants to outline the cause and effect of why something occurred. This type of analysis can be used effectively to monitor changes in sets of data and for variance or trend analysis.

Predictive

Predictive analysis handles the likeliness of future occurrences. A predictive analysis can help to highlight future trends and predict future outcomes. This may be useful for accountants’ clients in uncovering the potential impact of future changes.

Prescriptive

A prescriptive analysis deals with the question of ‘what will happen?’. Accountants should use this form of analysis to help them come to a decision in regard to what action they should take to reach their objectives or to help minimise a problem.

Choosing the correct type of analysis for your firm is crucial: the right type can help streamline operations and assist you in providing the best advice to your clients.

Communicating data persuasively

Communicating persuasively is a skill that all accountants have. However, discussing data in a persuasive manner may prove to be trickier. To begin, you must know your audience. What do they need to know? Finding this out will help you to tailor your tone of voice and message in order to effectively communicate your key data points.

It is important to select the right data to communicate – not all of it will be relevant for the purposes of persuasion. The correct data will be the data that supports the main points you are explaining, and it can be chosen by using data quality tools and exploratory analysis.

When communicating your data, it is vital to use clear and concise language. Avoid using jargon or complex technical terms that might not be known by your audience.

Mercia can help you communicate your data

Do you require assistance with persuasive communication? Mercia can help. Our ‘Using and Communicating with Data’ course is part of a series in which Daniel Clark helps firms and professionals understand and develop the skillsets that will enable them to thrive in a world shaped by rapidly changing technology.

This course will cover an overview of common types of data analysis undertaken by accountants and how to communicate data persuasively. Find out more here.