The Importance of Finance for Non-Finance Personnel
The importance of finance in any organisation cannot be overestimated.
A company can have a brilliant team in the C -Suite, great products, fantastic marketing etc. but poor financial management can destroy it despite its other strengths. And while the CFO and his team manage finance, they actually rely, heavily, on everyone else to ensure that the finances are in good shape.
But this reliance is dependent on how well the non-finance people grasp the how, why and what of finance.
And this is where many companies fail.
Financial awareness throughout the organisation is essential whether it’s a SME or a AED1 billion company. While the bigger company may survive longer, smaller companies can quickly run aground due to mismanaged finances and the UAE is replete with examples.
So, why all the fuss about finance and why is it so important?
Let’s count the ways:
Production needs to know the importance of inventory management and overheads on profitability and cash, the two pillars of finance.
Sales has to understand the impact of giving too much (or too little) credit on revenue, profitability and cash flow and also know that it’s not just sales (or top line) that matters but profits and cash flows too; you can have record sales but still be cash poor.
Marketing needs to get the link between pricing, costs, volumes and profits in order to price the product without losing money.
Leasing should know about the building costs and profitability to set the lease terms.
Human Resources should know the nature and impact of staff costs on profitability and why outsourcing (as an example) can be a smarter choice financially.
Everyone in the organisation should know the simple – but critical – difference between revenue and profit and between profit and cash, as these are the source of much confusion.
If you are a supplier you need to understand your key customers’ finances so that you don’t end up with bad debts.
Everyone should know how to make sense of his or her company’s financial statements. If the company is bleeding money, their jobs are at stake and if the company is doing well, not only is job security enhanced but their compensation could increase as well.
We can go on why, for most employees, an understanding of finance is not a luxury but is essential knowledge.
It’s for this reason that Genesis designed and launched the ‘Finance for Non Finance Managers’ (FNFM) course running from 22 to 23 September 2014.
It’s designed to bring anyone in a non-finance function up to speed on the basics of accounting and finance. It’s finance demystified, peppered with local examples and delivered by a highly experienced ex-finance director turned trainer.