Consistent cash flow is a major concern of businesses. It has become even more important after the spread of the pandemic. The free webinar conducted by Blue Ocean Academy on the topic ‘Finance for Non-Finance Professionals’ focussed on the basic finance terminologies and concepts that employees must know. Around 150 professionals attended the webinar.
Following are the key points that were discussed:
Consciously or subconsciously, all of us are involved in financial management. Knowledge in accounting and finance is necessary for all employees, regardless of their roles in the organization. It can help you in measuring your performance, your organization’s performance and making informed and efficient decisions in personal as well as professional life.
Why do you need to have an awareness of financial management? Following are the important reasons:
- Whatever be your area of expertise, you are an integral part of the business and you have an invaluable role in delivering success to your organization
- To know the key terminologies and concepts of accounting and finance
- To understand how you are contributing to the company and how your success can be measured
- To understand how the organization itself is measuring its performance.
All organizations have many managers. A major quality that is expected from these managers is the ability to make decisions. The most important component required for decision-making is the availability of reliable information, especially the information related to money. Everything that we do in business is ultimately connected to money. You need to be thorough with the financial concepts to become better decision-makers.
Important areas where you need to gain knowledge
There are some key areas in finance where you need to gain knowledge to be an efficient decision-maker. They are:
- Understanding accounting reports
You should have a basic understanding of the important accounting reports. Profit and loss statement also called P&L or income statement is one of the most crucial documents for any business. It is a financial performance report usually prepared for a period of 1 year. This report tells you how much money a business makes, and a lot more. Another document is a balance sheet, which helps to understand the financial health of the organization.
- Managing accounts receivable
All businesses can work efficiently only if they can receive payments at the right time. Accounts receivable is the payment which the company will receive from its customers who have purchased its goods and services on credit.
- Costing and cost management
Costing is the determination of costs for the products/services sold by a company. Cost management aims to improve a company’s profitability by managing, controlling, and eliminating expenses.
- Working capital management
Working capital management is a business strategy designed to ensure that a company operates efficiently by monitoring and using its current assets and liabilities to the best effects.
- Capex vs. Revex budgets
Capital expenditure is a major investment done to achieve the long-term goals of the business. On the other hand, revenue expenditure is the amount spent immediately like maintenance expenses.
- Ability to deal with the finance and accounts department
Most importantly, you can confidently deal with the finance and accounts department when you have a clear idea about the finance concepts.
Training in finance can help you to learn the terminologies and concepts in accounting to stay relevant in your organization. Finance for Finance Professionals or Certified International Finance Professional (CIFP) is a program that can enhance your understanding of finance and accounting.