Try this at your next meeting: when your financial colleagues start talking numbers watch everyone’s reaction. Ten to one you’ll see panic or boredom or a mass exodus from the room. What many managers may not realise is that people who are switched on to finance make business better for themselves and for the company.
Boost your credibility
Imagine you’re at that meeting again and this time instead of running for the exit you use your training in finance for non-financial managers to engage with the accountants. Maybe you question their analysis or put forward your own proposals or make your own decisions. Whichever you do, you’ll find that because you’ve backed up your position with figures and facts you’re more likely to win the support of other colleagues.
Do a better job
Whatever kind of manager you are and whatever kind of industry you work in finance will play a part in your life. At some point you’ll have to read balance sheets, analyse spread-sheets, record financial information and assess ROI. Finance is an intrinsic part of business and if you don’t understand it you aren’t able to play a full part in the organisation.
Understand fundamental financial terminology and concepts
Did you know that the average Joe (or Joanna) knows up to 50,000 words and uses up to 10,000 in every day speech? Amazing! Our guess is that you would be less surprised to learn that those 50,000 don’t include asset turnover flowchart or sensitivity analysis. The definitions and concepts behind these and other terms are nevertheless essential knowledge for every non-financial manager who wants to have meaningful communications with all colleagues and to make informed decisions.
Read and interpret financial statements to make effective decisions
Just as a doctor must understand medical records to assess patient health and progress so managers need to be able to read financial statements to assess how well a business is doing. Financial statements form the basic structure of performance measurement. Ignore them at your peril!
Gauge impact of decisions on financial performance
All managers know the importance of the bottom line but not all know that every decision can have consequences for the bottom line. So it’s only good sense for managers to have the know-how to estimate the likely financial effects before and after decisions. Remember that financial performance informs partners, investors, competitors, stakeholders and many more on how your company is doing and determines their reactions.
Understand the basis for evaluating investment decisions
Whatever kind of business you’re in you will need to invest money to generate future profits. It goes without saying, therefore, that investment decisions require the evaluation of costs, benefits and risks in order that managers can make the right choices. Bad investment decisions can cost you and your company more than lost opportunities.
Communicate effectively with financial colleagues and specialists
Communication is a two-way street. As a manager you will need to understand finance in order to influence the board, persuade partners, implement decisions, set expectations and question accountants and financial managers by way of charts, graphs and tables and with reference to financial information and targets.
Use a range of financial tools when making decisions
By understanding and employing the correct financial tools you will be able to examine the factors that affect the figures and be able to ask the right questions so you make the right decisions. Don’t worry – you won’t end up with more tools than in your garage tool box; a good finance course will cover what’s necessary in the language and detail that you need.
Prepare for the unknown
Forewarned is forearmed as the saying goes and getting a firm grip of your financials will stand you in good stead for dealing with eventualities such as changes in competition, customers, economy or legislation. When you understand finance, you understand one of the main anchors of business and you can deliver results.
Browse our library of customisable Finance for Non-Financial Managers eLearning courses.
[share title=”Share this Post” facebook=”true” twitter=”true” google_plus=”true” linkedin=”true” style=”color:#000″]