The 5 Finance and Accounting Skills all Business Managers Should Master
The Harvard Business School has released an easy guide for business managers across disciplines to gain a baseline understanding of finance and accounting. A corporation is defined as “a company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.” These people who form a corporation are organized based on functions such as finance, accounting, marketing, sales, manufacturing, supply chain, human resources, retail operations, customer service, customer support, and so on, depending on the industry and business model. Today’s global economy is extremely complex and requires deep functional expertise to navigate. Even within functions, you have specialists. For example, your legal department may have a person or team dedicated to specific areas, including intellectual property, labor law or international law.
While specialization is critical for larger organizations, business managers tasked with making critical decisions, and driving strategy should have a baseline understanding of other functional areas. Arguably the most important of these for any business manager to understand are accounting and finance.
This Harvard Business School guide lays out 5 key finance and accounting principles that all business managers need to know:
- Financial statement analysis
- Financial fluency
- ROI calculation
- Budgeting
- Financial performance measurement
The traditional financial planning software was focused on the needs of the finance department. Today’s modern FP&A solutions, such as FinLogic.io, are enabling companies to adopt the best practice of xP&A (Extended Planning & Analysis). xP&A is simply the expansion of financial analysis to all departments beyond the CFO’s department. As business managers throughout the organization become more fluent with the 5 skills listed above, they will be more valuable participants in your xP&A strategy.