By mastering the basics of financial decision-making, you’ll have a medium-term vision! We’ll explain everything!
Why should you have knowledge of finance when you are a manager?
To optimize value creation in the company
To make the best decisions in the organization, managers must understand the process of creating and evaluating value . The goal? For example, to measure the impact of automating or outsourcing certain tasks. Understanding value will also help you when reorganizing a department or hiring a candidate.
To better communicate with management
A real asset, accounting for non-financial professionals strengthens your credibility . By capturing more relevant input (data), you’ll be able to better defend your ideas to management, such as the profitability of a project. It’s also easier to discuss with the CFO (“Chief Financial Officer”) to take stock of your department’s costs!
To choose the right investments
As a manager, you’ll likely be required to make complex financial decisions. This includes choosing the right investments based on your chefs sabotados retornam à batalha department’s goals. Profitability, time to recover invested capital, and more—a wealth of data is used to assess the project’s relevance . Knowledge of finance for managers is therefore a real plus!
To control spending
As a good manager, the manager will manage a team but also monetary resources . The decisions you make will therefore have repercussions on the financial performance of the organization. Stop wasting resources! Observing figures, controlling costs, levers for optimizing expenses… are all valuable information to optimize the economic performance of your department.
Finance & Accounting
Key financial skills to be a good manager
To help you see things more clearly, we have selected the accounting skills for non-financial professionals that we believe to be the most relevant (the list is therefore not exhaustive 😉). These will allow you to carry out a rapid diagnosis of the activity and then identify performance levers .
1. Manage forecast budgets
An essential skill for all managers, budget management allows you to achieve set objectives and monitor activity with peace of mind .
Carried out by project or by financial year, the preparation of the budget serves in particular:
- To define an action plan to frame the financial exercises;
- To question, plan and measure the effectiveness of human and budgetary resources;
- To ensure that your department’s spending job data is aligned with the organization’s strategy.
2. Master the basics of accounting
Balance sheet, income statement, cash flow statement… you’ll also need to understand the organization’s financial statements ! The goal? To better understand how your organization operates. Mastering the basics of accounting for non-financial professionals is an excellent way to lay the foundations for knowledge related to financial ratios and management control!
3. Interpret the main ratios (KPIs) of management control
A cross-functional process, management control is used to analyze the company’s financial and accounting performance. In other words, it primarily involves ensuring that resources are used efficiently in each department.
For a “non-financial” manager, certain key indicators called KPIs remain to be discovered:
- The rate of profitability : gross operating margin, labor productivity, etc.;
- Working capital requirement (or WCR): this concerns short-term financing needs to cover the gap between receipts and disbursements;
- Cash flow : indicator for measuring cash flow.
Be curious, this list is not exhaustive!
