As Liza Minnelli famously sang, “Money makes the world go around.” And the same applies to businesses and organisations – no matter what your operating goals and principles are, whether you’re public, private or charity sector, you need money. And if you’re a manager or executive, you need to understand money.
However, all too often, people reach a management position with no formal training in finance. Which is not to say you have to be an accountant, but you may well have to speak to accountants (and understand their arcane field of knowledge!) But what, specifically, do you need to know?
- Basic business finance awareness – Whatever your role, your team either earns or spends money, or both. Which means your function (sales, marketing, HR…) is plugged into the organisation’s finances in some way and that’s a context pretty much all managers need to understand, including the use of balance sheets, profit & loss accounts, cash flow statements, and concepts such as assets, liabilities and reserves, and depreciation and how to manage a budget.
- Budgeting – Managing a budget is about more than just doling out payments from your designated pot of money. Budgets and allocations should be directly tied to the organisation’s strategy. A well-run budget helps deliver that strategy, adds to the value of the business, and gives you real control.
- Cost control – Controlling business costs is all about awareness (not just yours), reduction and efficiency. As a manager or executive, you understand business operations in terms of costs (direct and indirect) and overheads and not only effectiveness, client experience and branding, etc. Financial models are used to assess the cost of new services and products and you’re clued up on risk management and mitigation.
- Fraud – No one likes to talk about it but fraud happens. And when it does, the impact is more than just a little (or a lot of) missing money. Fraud can have repercussions on employees, suppliers and customers, and ultimately, even the survival of the organisation. Managers need to understand how and why fraud happens, how to spot it, how to tackle it and, ideally, how to prevent it happening in the first place through proper corporate governance, accounting standards, checks & controls, and audit and reporting structures.
- Project costs – Whether it’s a few tweaks to one of the roles on your team or a wholesale revamping of your department’s fundamental ways of working, all new projects have cost implications and those costs need understanding and managing. Appraising and analysing project costs before the project begins helps eliminate and minimise risk (to the project and to the organisation’s broader financial standing) before you even start.
So, the million-dollar question is, what financial knowledge and skills are essential for your particular role and, do you have them?
If you don’t or if you’re just looking for a ‘financial awareness boost’, check out our wide variety of standard financial training packages, or give us a call on 01582 714285 to talk about tailoring something to your organisation’s specific requirements. We’re always here to help.