Mel Brooks Associates

The need for all managers to be financially literate

Most companies have competent financial managers – but there is the need for non-financial managers, whose decisions impact on financial results, to be able to understand exactly how their decisions will impact on the results.

What this means is that all managers making operational decisions – from those in production to those in sales – need to be able to carry out a cost/benefit calculations to ensure that what they intend doing will ultimately be profitable. For example, the indiscriminate granting of credit to meet sales targets may not result in additional profits because of slow payers and bad debts.

Managers responsible for purchasing are often tempted to make bulk purchases to achieve lower prices – but purchasing more does not mean that more will be sold. The resultant cost of carrying the stock and the associated risks such as theft, damage and obsolescence may out way the benefit of the lower prices of purchases.

Clearly an understanding of costs, how the accounting system functions and how to interpret the financial statements of the business is needed.

The aim of the Mel Brooks Associates 'Finance for Non-Financial Managers' workshop is not to teach non-financial managers how to do accounting but rather to give them the confidence in knowing what questions to ask their financial colleagues – and the ability to evaluate the answers they are given. They also need to clearly understand the old adage, ‘profit is an opinion – cash flow is a fact’ – and they need to understand that cash flow is the ‘oxygen’ of business – if it stops the business literally dies.                                

If you want to discuss having your own in-company 'Finance for Non-Financial Managers' workshop please call me on 083 377-1858 or e-mail me atmba@melbrooks.co.za 

http://www.melbrooks.co.za/finance-for-non-financial-managers.html