Today, managerial roles in the business world are evolving. In addition to overseeing routine operations, managers have to stay on top of all other business activities. They have to monitor marketing campaigns, run recruitment drives, and most importantly, manage finances. Most business managers dread the word ‘accounting’ since they haven’t had the chance to plunge into numbers. Likewise, they may not have a clue about payments, invoices, and payrolls.
In reality, accounting is no rocket science. All you have to do is familiarize yourself with standard financial terms and understand the processes. For that, you can take accounting-related courses or learn the tips and tricks of data analysis. Similarly, business managers can also equip themselves with tech skills to run automated accounting processes. Having basic know-how of accounting practices will allow managers to manage business finances more effectively.
As a business manager, if you are ready to delve into the world of finance, let us help you navigate it. Here we are highlighting six tips for business managers to brush up on their accounting skills.
1. Keep yourself open to learning
In managerial roles, people believe people are too busy to learn more. Some keep themselves busy with routine business tasks, while others explore leadership opportunities. Learning is crucial for achieving professional success, and the same rule applies to business managers. To improve accounting skills, you have to find suitable learning opportunities. For starters, enroll in online courses to understand the ins and outs of the finance world.
Next up, you can explore virtual educational programs. With online schools, you can complete higher education without going to college. Thus, even if you don’t have an accounting-related background, look for online masters in accounting for non accounting majors to learn the ropes. It will equip you with the expertise and knowledge necessary for managing business finances smoothly. In addition, you would master the art of financial analysis, allowing you to improve business performance.
2. Utilize accounting software & tools
Despite disruptive technological advancements, people still fear technology. As a business manager, you have to integrate accounting tools and software. In addition to streamlining financial processes, these tools can improve your accounting skills and make work easy. You can begin by recording journal entries on the system, and it would create financials automatically. In turn, you can see the division of assets, liabilities, and equity in one place.
Moreover, accounting automation would improve accessibility. All software applications are cloud-based, allowing managers to access data from anywhere at any time. For example, if you prepare performance appraisals, you can open the software to see the following year’s budget. It will allow you to determine valid promotions and raises while keeping finances in check.
3. Learn to analyze data
Managers already operate systems that manage data, but that’s not enough. Business managers must know how to interpret that information as well. In other words, you have to tell the story that data presents. For instance, if the profitability ratio stands at 8% for the past two years, you must explain the reasons behind it. It could be because of rising expenses, decreasing sales, and spiking raw material costs. Hence, look at the spreadsheet and determine where the business lags.
Now, the question is how to learn the trick of data analysis? First, managers have to understand the financial ratios and their connection with different elements. If the dividends are declining, managers have to identify the factors behind it. Second, you have to read the annual reports of your competitors. There, you would see how they have analyzed and justified their financial performance, giving you real-time insight into data analysis.
4. Acquire sector-specific experience
The finance world seems quite identical. Every company has to prepare an income sheet, balance sheet, and calculate ratios. Despite having standard practices, financial management differs from industry to industry. If you work for a multinational company, the accounting dynamics will be different from an SME. You would have to keep up with the foreign exchange rate to ensure a smooth flow of imports and exports. Likewise, business managers will have to oversee local and international customs charges.
Similarly, if you are working for a financial institution, all the assets and liabilities will vary. Banking institutions treat their deposits as liabilities and loans as assets, both being intangible. As financial models differ from industry to industry, business managers must acquire sector-specific experience. Knowing related financial practices will make the business thrive while reducing the likelihood of mistakes.
5. Learn to prepare financial statements
In the age of real-time reporting, the preparation of financial statements has become a crucial task. Therefore, managers must learn to prepare financials if they wish to upscale their accounting skills. You can begin by recordkeeping and general ledgers. Once you understand the trial balance, go through the structure of financial statements. From assets, expenses to capital, see where every element goes and fill in the boxes.
In addition, you have to learn to interpret these financials to make educated business decisions. If you see the liability side of the balance sheet increasing, you will have to curb external financing. After all, a high debt burden can be alarming for the entire business. The way you interpret information in the financial statements will reflect the success of your company. Hence, ensure you are well-versed with financial statements.
6. Recognize the big-picture impact
Surprisingly, accounting skills go beyond crunching numbers. Business managers should recognize the big picture impact that might have consequences on the company financially. For instance, if the money supply is rising – the threat of inflation is also increasing. It means the business managers will have to adjust price levels beforehand. Therefore, they have to keep an eye on the country’s economic condition. For this, you have to become financially woke.
Besides short courses, indulge in daily reading. You can go through the business recorder’s website every morning to determine what’s happening in the market. Likewise, subscribe to Bloomberg business report to get daily updates on market dynamics. In-depth financial know-how will go a long way in improving business performance while helping you become an accounting pro.
Conclusion
Now, accounting is amongst one of the core businesses functions since it ensures effective financial management. Therefore, business managers must brush up on their accounting skills to thrive in the professional setting. From preparing financials to acquiring industry-specific experience, they have to learn the financial dynamics inside out. Remember, learning a new skill always takes time, but you will soon become an accounting expert with gradual practice.
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