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Finance Variance Narrative Generator

Use when turning financial variance notes, spreadsheet summaries, or FP&A commentary into executive-ready variance narratives.

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Finance Variance Narrative Generator

Variance tables tell you what changed. Executives want to know why it changed and what to do about it. This skill turns raw variance data into a clear, decision-oriented narrative.

When to use this skill

Use this skill when:

  • You have actuals-vs-budget or actuals-vs-forecast variances to explain.
  • You are preparing the commentary for a monthly or quarterly review.
  • You want consistent, plain-language narratives instead of restating the numbers.

See references/variance-analysis-checklist.md for the review checklist and templates/executive-narrative-template.md for the output structure.

Inputs needed

  • The variance data: line item, actual, budget/forecast, and variance ($ and %).
  • The period and the comparison basis (budget vs forecast vs prior year).
  • Known drivers or one-time items, if any.
  • The audience (board, CEO, department head).

Process

  1. Sort variances by absolute dollar impact and keep the material ones.
  2. Apply a materiality threshold so small noise is excluded.
  3. For each material variance, state the driver in business terms, not accounting terms.
  4. Separate one-time items from recurring trends.
  5. Note whether each variance is favorable or unfavorable to the bottom line.
  6. End with the "so what": the implication for the forecast or for action.
  7. Keep the narrative to the few variances that actually matter.

Prompt or workflow

You are writing executive variance commentary.

Period: [PERIOD]   Comparison: [budget / forecast / prior year]
Audience: [BOARD / CEO / DEPT HEAD]
Materiality threshold: [$ AMOUNT OR %]
Variance data:
"""
[PASTE: line item, actual, budget, variance $, variance %]
"""
Known drivers / one-time items:
"""
[PASTE OR "none provided"]
"""

Produce, following templates/executive-narrative-template.md:
1. HEADLINE: one sentence on the overall result vs plan.
2. MATERIAL VARIANCES: for each above threshold, a sentence naming the driver
   in business terms and whether it is favorable/unfavorable.
3. ONE-TIME VS RECURRING: separate them clearly.
4. SO WHAT: implication for the forecast or recommended action.

Rules:
- Exclude variances below the materiality threshold.
- Explain drivers in business language, not "due to timing".
- Do not invent drivers; if unknown, say "driver not yet identified".

Quality checklist

  • Only material variances are discussed.
  • Each variance names a real business driver, not "timing".
  • One-time items are separated from recurring trends.
  • Favorable vs unfavorable is explicit for each item.
  • The narrative ends with an implication or action.
  • No driver was invented; unknowns are labeled.

Common mistakes

  • Restating the variance numbers as prose without explaining why.
  • Treating a one-time item as a trend (or vice versa).
  • Burying the one variance that actually matters among trivial ones.

Example output

Headline: Operating income beat plan by $1.2M, driven mostly by delayed hiring.

Material variances:
- Payroll favorable $0.9M: 6 planned hires slipped to next quarter (recurring risk).
- Cloud costs unfavorable $0.3M: one-time migration spend.

One-time vs recurring: migration spend is one-time; hiring delay will reverse.

So what: the beat is largely timing. Hold forecast flat and expect payroll
to normalize next quarter.
  • Spreadsheet Anomaly Review — to catch data issues before writing the narrative.
  • Board Deck Insight Extractor — to pull variances out of an existing deck.
  • Decision Memo Builder — when a variance demands a decision.

Attribution

This skill was created by Vectory and is licensed under CC BY 4.0.

Source: https://vectory.io/skills/finance-variance-narrative

Attribution: "Finance Variance Narrative Generator" by Vectory.