Clarity is key. It's important to provide narrative that paints a picture to explain what the variance means. The narrative should tell managers whether the variance is good or bad, what it impacts, how any challenges can be addressed and what could be looked at next.

The very first thing (well before looking at variances) is to have clear budget assumptions. Ensure the budget itself is clearly understood as a costed set of assumptions owned by the business. This clarity sets the foundation for communicating and understanding variances. Focus on assumptions and impact: Clearly communicate which budget assumptions have differed, what the impact of these differences is, and what can be done to address adverse variances or enhance favourable ones. [What? So What? What Now?]