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How important is finance for non-finance managers?

Money makes the world go round - while this sounds like something of a cliche it’s true on both a personal and a professional level. There are many more elements involved in business success than just money but there’s also no doubt that being able to effectively understand, and handle, the finance part of an enterprise is essential knowledge for all of those working within it, not just those employed in the finance team. For managers it is vital to understand where finance has an impact on their own individual role - and vice versa.

What do non-finance managers need to understand?

No department or team exists within an organisation in isolation today. Success in one area will have a knock on impact further down the line and poor financial management can do the same. Simply leaving all the financial aspects of a business in the hands of financial managers and the finance team can mean that an enterprise is constantly firefighting instead of coherently working together towards the same goals with the same clear insight. With that in mind there are some key areas of finance within any businesses that all non-finance managers need to get comfortable with.

●      Accounting. For example, what accounting procedures are in place within the business and what timetables do these run to. The data that is required for accounting processes will be essential to grasp, as well as the purpose of accounting and the consequences of mistakes and omissions. Poor record keeping or failing to adhere to deadlines that can cause compliance problems can all result from a lack of financial understanding and cause serious issues with a business.

●      Budgeting. A sound understanding of how budgets operate within the business is going to be vital to ensure that those budgets work. In simple terms, when expenses rise above income any business is going to struggle. However, when non-finance managers are well versed in budgeting there is also the potential for budgets to be made more effective and streamlined.

●      Sources of enterprise finance. Where does the cashflow and capital come from and what can individual managers do to help ensure that this continues to happen? A lack of understanding of how a business is funded can lead to mistakes and ignorance that may inadvertently cause issues. 

●      Cashflow. Being able to effectively forecast and manage cash flow is something that every manager within the business needs to be able to do, not just those who are directly involved in finance. This may extend to a working knowledge of the key tools for forecasting and financial management, including profit and loss and the balance sheet. A broader understanding of how cashflow impacts the business will be essential to ensure managers can see the picture for the entire business and not just their own team. 

●      Financial risk management. When every manager in the building is aligned when it comes to risk management the measures and mitigation that is in place to help protect the business is much more effective.

Finance is an essential part of the skill set for any effective non-finance manager today. Find out more by booking onto our Finance for Non-Finance Managers training course…