Storytelling using Waterfall charts

 Read time: 4 mins

Welcome to this week’s edition of Financial Fluency. Today, we’re going to explore how non-finance leaders can use Waterfall Charts as a storytelling tool to communicate complex problems in a simple and effective way.

Understanding Waterfall Charts

 A Waterfall Chart, also known as a bridge chart, is a form of data visualization that illustrates how an initial value is affected by a series of intermediate positive or negative values.

So what am I saying in simple terms??? 

As a non-finance leader, you’re often tasked with making sense of complex issues and communicating this information to your team or stakeholders. A Waterfall Chart can be a powerful tool in your arsenal, helping you to visually break down an issue into digestible components making it easier to understand the problem.

Using Waterfall charts to Tell a Story

Waterfall Charts can be used to tell a story about your data.

For example, if you’re managing a project and want to show how different factors have contributed to a delay, you could use a Waterfall Chart. If you missed your Sales budget for the quarter, you could use a waterfall chart to breakdown the key factors that drove difference between achieving budget and actual performance. 

I have made an example waterfall below. Lets assume you had a budgeted target of $500,000 for the quarter, however your department exceeded expectations and delivered $580,000. You are able to use the waterfall to breakdown the key components that drove that result. And its not just negatives that you should cover. You'll see that I have inserted issues and wins. The benefit in this instance is that it allows for the audience to very quickly understand the key items and if they contributed or detracted from the net result. 

Creating your own Waterfall

There are so many amazing resources online which walk you through step by step what is required. If you would like to have a go at making your own, I'd recommend you head over to the Corporate Finance Institutes website where they have an excellent short video. 

Alternatively, here is a direct link: Link to YouTube video

I hope you found this breakdown helpful. If you have any questions or would like to delve deeper into financial management topics, feel free to reach out. Stay tuned for more insights in our upcoming newsletters.