The reality of being a successful business manager or owner is having a solid grounding in talking and understanding the language of accounting fundamentals
Budgeting
Creating and managing a budget is an important skill for anyone, regardless of their profession. A budget can help you track your income, expenses, and savings, and ensure that you are making the most of your financial resources.
Cash flow management
Managing cash is crucial for any business, as it determines the ability to pay bills and make investments. This includes forecasting cash flow, managing accounts payable and receivable, and identifying potential cash flow issues.
Financial analysis
The ability to read and understand financial statements, including the balance sheet, income statement, and statement of cash flows. is vital for every manager. This includes knowing how to calculate ratios such as the debt-to-equity ratio and the return on investment, and using this information to make informed decisions.
Basic accounting principles
The foundation of financial analysis is a basic understanding of how accounting works and how it is used to measure the financial performance of a business.
Investment basics
Even if you are not an accountant, you may still have investments that you need to manage. Understanding the basics of investing, such as different types of investments, risk and return, and diversification, can help you make informed decisions about your investments. This includes understanding the risks and rewards of different investments and knowing how to calculate the payback period and internal rate of return.
Risk management
Identifying and mitigating potential risks is crucial for any business. This includes identifying potential threats, implementing risk management strategies, and creating contingency plans.
Credit management
Being able to manage credit responsibly is essential for any business. This includes understanding credit scores, managing accounts payable and receivable, and negotiating with creditors.
Strategic planning
Business managers need to be able to develop and implement long-term plans for the growth and success of the business. This includes setting goals, identifying opportunities and threats, and creating a roadmap for achieving the business's vision.
Tax planning and compliance
Understanding how taxes work and how to minimise your organisation's tax burden is important for anyone. This includes knowing how to claim deductions and credits, and understanding tax laws and regulations.
Cost management
Managers should be able to identify areas for cost savings and implement cost-cutting measures to increase efficiency.
Investment analysis
Managers should be able to assess the potential return on investment for different projects and make informed decisions about which ones to pursue.
Internal controls
Managers should be familiar with internal controls, including policies and procedures for managing financial transactions, to ensure the accuracy and reliability of financial reporting.
Accounting software
Managers should be proficient in using financial software, such as accounting and budgeting software, to manage and analyse financial data.
Philip Seigel CPA FFIN, Comdex Training News & Blogs January 2023
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