Regardless of business, every manager must be versatile and diverse in their skillset. Being able to bring out the best in individuals and get them to deliver promptly and on time is important to any company. Managing people is not one category because people do not exist in one area. And one particular set of skills managers must develop early on, for the sake of the staff and the business is finance skills.
Why finance skills matter
Businesses can only exist if finances are in order. The main point of a business, for many academics, is survival not profit. Being able to continue operating in current and turbulent financial climate is itself hard work. Obtaining success is now measured in how long we can keep going, not how much we can get out at the end.
Writing in the Independent, William Kay noted, in terms of personal finance:
“Survival will become more important than profit, protecting money more important than maximising it. Anyone inclined to put money into the stock market may… wince and think again. Multiplied several million times over, that adds up to a huge drag on asset values.”
To be able to get the most out of finances, we need to be skilled in understanding how to manage it. Managers, being central to any business, must care about having such knowledge since it cannot be left up to only a few at the top to make sure a business survives. These days, anything can end a business so we must all do what we can to keep it moving.
What kind skills matter
Managers should encouraged to take a finance course, to get them up to scratch on some key concepts. For example, are we aware of cash versus accrual accounting? The main difference is the timing and recording of transactions. Cash is used by small businesses and often personal finance. Accounting only happens when money is received or paid out. Accrual isn’t dependent on the cash’s existence: accounting happens as soon as transactions happen or are incurred. We don’t wait for the money to appear or disappear, we record it immediately. Most businesses use this latter method.
Similarly, managers should definitely learn about how to create a budget for their department. This not only helps provide a strong argument in favour of particular projects, but helps prevent any mistakes or miscommunication involving finances (armed with knowledge about finance statements, managers can be powerhouses in their company).
There are all sorts of other finance skills managers should consider, if they want to do the best they can for their business and help their departments remain important.
(Image credit: Steve Wilson / Flickr)