The gift for interpreting numbers is an essential skill for any FD and particularly for aspiring CEOs. Finance directors are rightly admired for their technical skills and ability to decipher the mystery of the P&L, the erosion of the gross and net margins and the effects of tax charges and currency fluctuations on the bottom line. But the true value of all this is only unlocked if softer skills are also mastered.

The finance team is often criticised for only speaking to itself and its peers. The effort involved in explaining NPV, liquidity ratios and the need for gearing to the sales and marketing team doesn’t always seem like a good use of time. But while not everyone is fluent in the language of finance, communication is a key skill that FDs need to master.

A survey by the ICAEW found that senior finance professionals value commercial skills above leadership and communication skills, while those lower down the career ladder place communication skills at the top of their list of priorities. CEOs on the other hand place leadership and communication skills firmly at the top of their list of key requirements.

So are communication skills really that important? Are financial skills alone enough for the modern FD? The answer is most emphatically ‘no’ and certainly not if the FD has aspirations to become CEO.

‘Touchy-feely skills’ ­ as one AIM listed company’s FD called them ­ are paramount because FDs, like other directors, spend a lot of their time communicating with and leading others.

Finance affects everyone touching a business ­ the suppliers, customers, employees, investors, local communities etc. So whether FDs are delivering punchy presentations to a highly discerning analyst and investor audience with high expectations, or trying to cut costs, effective communication is vital. A poor performance does not reflect well on either the FD or the company.

So what makes a good communicator? There are a number of relatively simple steps you can take that will make a huge difference to your communication:

• Identify the key messages. Make them strong, clear, consistent and as simple as possible

• Identify the stakeholders. An FD needs to think who they are trying to communicate with and tailor the message accordingly. The messages should be complementary but are likely to have different focuses. During the sale of a company, investors want to know if they are getting a good return, while employees want to know their jobs will be safe.

• Choose appropriate communication channels. Different audiences engage through different channels. Investors are likely to read the press and analyst reports, while customers may sign up to a newsletter and staff find information through their managers, internal emails, the intranet and departmental meetings.

• Communication is a two way process. Your stakeholders are likely to have questions about what you are saying or why you’re not saying anything. If you don’t address these questions, then the resulting rumour, speculation and uncertainty can lead to misinformation that it is very difficult to correct. Communicate with your stakeholders regularly, think about the questions they are likely to ask and make sure relevant information is readily available.

Arun Sarin, the 2007 winner of the PRCA Cision Business Communicator Award, is a good example of a great communicator. Despite a very troubled period during which he came under prolonged personal attack, the Vodafone chief’s clear enunciation of the network’s twin strategy of chasing emerging market growth, while simultaneously competing on content in mature markets, won him support. It was the strength and consistency of Sarin’s communications that persuaded shareholders to back him, enabling him to complete the landmark acquisition of Hutchison Essar in India.

Involve the experts

The numbers on a balance sheet look the same whatever colour the PowerPoint slide, but the words used to explain them will have a big effect on the reaction of investors, the board, the media or staff.

In the same way as you decipher the P&L, PROs (public relations officers) will understand what you need to communicate, with whom and how. Many companies will have in-house communications expertise, however, where additional capacity, a fresh perspective or specialist expertise is needed, there are numerous PR consultancies who can advise you.

Media savvy

Good communication with various stakeholders needs to be complemented by the development of productive relationships with those who influence them - the media. This can be a sensitive issue: some CEOs are reluctant to give their FDs 'equal billing' when briefing journalists. However, in our experience, business journalists are always keen to hear from FDs, particularly in the bi-annual reporting season, and FDs should be confident in their ability to respond to rigorous questioning.

In normal circumstances, media briefings with specialist financial or business sector media are pretty straightforward. The journalist will be immersed in the company's business sector and will be familiar with the company's recent performance. In short, the journalist will have a number of specific 'technical' questions which can be answered without ambiguity.

Problems tend to arise when the FD is briefing a journalist who has limited understanding of the sector and/or ignorance of how companies work - and it happens more than you think. Here the onus is on the FD to ensure, without sounding patronising, that the journalist understands what they are being told so that the resulting copy is factually accurate.

There are, of course, a number of dos and don'ts:

• Ensure that your responses are supported by written information.

• Always assume that everything you say, however peripheral to the main discussion, is 'on the record'.

• Avoid, whenever possible, the 'no comment' option. The journalist will assume that you have something to hide.

• Make every effort to respond to media enquiries as quickly as possible. Clearly the FD may have to consult with other parties to agree a suitable response, but the journalist, who is usually fighting a deadline, must be accommodated.

Diana Soltmann, chief executive of Flagship Consulting, on behalf of the PRCA