Public Relations (PR) aims to promote the relationship between a company and its customers or public groups. The organization does this by creating goodwill.
If an organization systematically focuses on mutual understanding between a company and financial relations and stakeholders, we speak of financial Public Relations.
It is increasingly difficult for organizations to obtain financing, resulting in rising financing costs. The financing needs of many companies are increasing. If this financing is not available, it will be an obstacle to possible growth. In this case, financial PR is absolutely indispensable. The numbers are an important part of the whole. However, financial PR looks beyond just the traditional annual accounts and focuses on current events and the future.
The professional and effective communication of important corporate financial information ensures increased confidence among lenders, shareholders, the wider public and other stakeholders. Financial communication is therefore essential to improve external image.
The stakeholders of financial PR
Who are the stakeholders central to financial PR? There are different stakeholders when it comes to financial Public Relations. Within the financial context in which you operate your company, you are constantly monitored and analyzed.
The type of stakeholders is very broad: we include your competitors, but also your employees, for example. These are examples of external parties that you can consider as stakeholders:
- Financial media
- Investment Analysts
- Institutional investors and shareholders
- Private investors and shareholders
- Competitors
- Banks and lenders
- Credit reporting agencies
- Credit insurers
- Suppliers
- (Future) employees
Your competitors study your company's financial results, operations and business model in order to gain a competitive advantage themselves.
In addition, companies are constantly analyzed by banks and lenders, both for regular loans and special loans. Credit information agencies provide many of the above parties with information, which means they play a major role within you PR strategy for financial PR.
Naturally, investors and shareholders are also looking for reliable information about the financial position of your organization.
What is price-sensitive information?
Price-sensitive information is information that can have a 'significant' influence on the price. This information concerns, for example, an event that you can reasonably expect to occur and that has significant consequences for the development of the company and the stock price.
Price-sensitive information must be made public, because the stock exchange wants to inform investors fully and correctly so that they have the correct information on which to base their decisions and analyses.
If not everyone is aware of price-sensitive information, the playing field is not balanced and market abuse can occur. This damages the integrity of the financial market and can lead to market manipulation or insider trading.
Means of financial PR
With financial communication you inform financial stakeholders about the past season. This can be a year, quarter, month or other period of time. Financial communication is done using the annual report, brochures with key figures, press releases, company brochures, prospectuses in the case of an IPO or share issue, a shareholder bulletin and/or corporate advertising.
There are also oral means to use, such as press conferences, shareholder meetings and interviews with the press.
These are the main tools for financial PR:
- the annual report
- business plans
- financial press releases
- meetings for shareholders and analysts
- company website
The annual report contains the annual accounts. This is the first document that stakeholders look at when assessing the creditworthiness of the company.
Annual accounts with a negative result usually give you a difficult starting point for the financial positioning of your company. The financial position may have improved since the annual accounts were published. Please let your financial relations know in the meantime by providing interim figures.
Focus as much as possible on the positive and strengths of your company. For example, your company may be doing well in terms of industry and market conditions. Or that you have just started and the result is therefore in line with the expectations from the business plan.
The business plan is a second important part of financial Public Relations. Business plans are strong if they are qualitatively detailed and if they lead to a positive cash flow. If the result is negative, it may be necessary to adjust or improve the business plan.
Publication of annual figures, half-yearly figures, quarterly figures
By regularly publishing figures, you ensure that all stakeholders have the most recent information. This helps them make financial decisions. In the case of investors, they can take action in a timely manner when the new figures are released.
Listed companies publish quarterly, half-yearly and annual figures.
Figures are always presented before or after the stock exchange, when the stock exchange is closed and it is not possible to trade immediately on the basis of the new figures. This is a security mechanism built in to protect trading. This is especially necessary for price-sensitive information that can have explosive effects. The fair in the Netherlands opens from 9:00 am and closes at 5:30 pm.
Importance of financial communication
In short, public relations aims to create goodwill in order to achieve a goal or improve the image. By devoting attention and energy to financial PR you ensure a strong image among financial parties. This strengthens your company in all kinds of areas. This makes it easier to attract financing, the stock price can rise and the confidence of suppliers increases.
Also see: PR campaign
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