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Five Finance Areas Every Manager Should Know About
Tue 22nd March 2011
1. How to read a balance sheet
All companies have a set of accounts that determine the financial health of the organisation. If you can't read a balance sheet, you can't tell if the company in question is about to fold, doing badly for its shareholders, or on the other hand, is making money hand over fist! A balance sheet, and reading the subsequent profit and loss statement associated with it is the cornerstone of financial knowledge that you just cannot do without. Learn it, and you'll be able to use it not just at work, but for assessing your own financial health, too.
2. Policies: pensions, expenses and salaries
Very often in a managerial position, you are faced with challenges such as a member of staff asking for a pay rise, or querying their pension, or you having to authorise some expenses for them. Although much of this knowledge is usually the responsibility of the HR department, it would pay for you to know it, too.
Policies change all the time - especially after a budget or when the economy changes - and it looks foolish if a manager doesn't know the basic rules. After all, you'd need to know it for your own finances, right? Also, knowing what the policies are will help you spot when something isn't being followed- something we'll touch on later.
3. Tax
If nothing is certain except death and taxes, then it may benefit you to learn about how much is due, not just from you, but from the whole company. Like the HR department for pension policy, the accounting department will usually take care of corporation tax and your personal items on your payslip for the Inland Revenue, but if you learn it yourself, then you can be a more successful manager. Imagine calculating a budget and forgetting to add Value Added Tax - it would be 20% over budget before you even started!
4. Receipts and keeping track of spend
Paper trails, reporting and receipts are essential to running a tight financial ship. If you can't prove something was paid or that something is due, you're going to run into trouble. Good managers - even the non-financial ones - must always record transactions so that they can easily be consulted at a later date.
5. Looking for red flags, or abuse
Being oblivious to any financial policy, losing receipts, not recording transactions, not knowing about tax or any other lack of financial knowledge can leave your company open to abuse. This may not be intentional, but slippage can occur when a manager isn't on the ball. Know your finances, and you'll also know when they're going wrong, or going to the wrong person. Be on the ball, and you'll be a better manager as a result.
Author is a freelance copywriter. For more information on finance for non financial managers london, please visit https://www.stl-training.co.uk
Original article appears here:
https://www.stl-training.co.uk/article-1533-five-finance-areas-every-manager-should-know-about.html
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