What Managers Need to Know?
WHAT MANAGERS NEED TO KNOW?
The directors of a company have a legal responsibility to ensure weather the company keeps appropriate accounting records which enable them to report the financial position of the business to investors, regulators and tax authorities. In an organization financial acumen is a skill that will support any manager in their career. The skill is not about knowing the intricacies of transaction recording or the details of financial reporting; it is about having the ability to do six things:
• Engage with the business strategy – know the organization’s mission, objectives, strategy and tactics at a macro level to make sure that all actions that are taken align with these overarching principles.
• Understand performance indicators – know the portfolio of metrics that are used to monitor business performance at a company, department and project level. This includes knowing how the indicators are calculated to make sure that actions taken can be translated into how the indicators will be affected.
• Read and interpret financial reports – be able to read the financial reports that are generated within the business. This includes company, department, budget area and projects. The skill is being able to assess strengths and weaknesses and identify appropriate actions that will improve performance.
• Contribute to the budgetary process – participate in a budgetary process, the setting of budgets and the monitoring of performance through the budget year. At a detailed level this includes using variance analysis to interpret the causes of deviation from budget predictions and producing year-end forecasts that predict the likely outturn for the year.
• Know the financial consequences of the decisions – identify the financial implication of decisions through the creation and evaluation of a business case that takes into account the likely financial effects of the changes to the business that will take place as a result of any decision. This
The directors of a company have a legal responsibility to ensure weather the company keeps appropriate accounting records which enable them to report the financial position of the business to investors, regulators and tax authorities. In an organization financial acumen is a skill that will support any manager in their career. The skill is not about knowing the intricacies of transaction recording or the details of financial reporting; it is about having the ability to do six things:
• Engage with the business strategy – know the organization’s mission, objectives, strategy and tactics at a macro level to make sure that all actions that are taken align with these overarching principles.
• Understand performance indicators – know the portfolio of metrics that are used to monitor business performance at a company, department and project level. This includes knowing how the indicators are calculated to make sure that actions taken can be translated into how the indicators will be affected.
• Read and interpret financial reports – be able to read the financial reports that are generated within the business. This includes company, department, budget area and projects. The skill is being able to assess strengths and weaknesses and identify appropriate actions that will improve performance.
• Contribute to the budgetary process – participate in a budgetary process, the setting of budgets and the monitoring of performance through the budget year. At a detailed level this includes using variance analysis to interpret the causes of deviation from budget predictions and producing year-end forecasts that predict the likely outturn for the year.
• Know the financial consequences of the decisions – identify the financial implication of decisions through the creation and evaluation of a business case that takes into account the likely financial effects of the changes to the business that will take place as a result of any decision. This