Financial Wizard or Financial Troll? [Blog] - TMS Consulting (2024)

Why non-finance managers need basic accounting and finance skills

Finance people can be a different breed, they have a fixation for numbers and speak a different language, and can think of every reason why your request for funding ought to be declined, as some managers would have us believe.

Anyone familiar with the Dilbert Cartoons (by Scott Adams) knows that he portrays the finance people in the office as ‘trolls’ who like nothing better than making life difficult for non-finance managers.

Admittedly I have come across a few finance managers who fit that profile, but in reality they are few and far between. Believe it or not, finance is there to help you! One of the greatest impediments though to having the finance team working effectively with non-finance managers is the lack of basic accounting and finance knowledge and skills of non-finance managers!

Finance, like HR, ICT, and OH&S is an internal service provider, there to assist you to understand the financial intricacies and implications of your decisions, thus better informing your decision making. Well, let’s get back to the question, are you a financial wizard, or a financial troll?

To be a financial wizard you don’t have to be an accountant or a finance manager – just know your business very well and possess a basic knowledge of finance and accounting and you’ll be able to manage your budget well and make good business decisions. What do you need to know about finance and accounting to manage budgets, cost centres and make sound financial decisions? The following is a brief list of what I consider to be the basic knowledge and skill sets to be acquired by non-finance managers.

1. Cash versus Accrual Accounting. Cash and non-cash transactions, the matching principle and double entry transactions
2. The accounting elements (assets, liabilities, equity, revenue and expenses)
3. Financial Statements.
   1. Profit & Loss Statement (aka Statement of Financial Performance). Summarises operational performance.
   2. Balance Sheet (aka Statement of Financial Position). Provides a summary of the investment and financial structures of the business.
   3. Statement of Cash Flow. Where the cash has come from and where it’s gone.
   4. Statement of Changes in Equity
   5. Notes to the accounts
   6. Basic financial ratios (analysing and making sense of the financial statements)
4. Planning, resource allocation, variance analysis and reporting
5. Cost Volume Analysis and Break-even. The relationship between activity and revenue and costs, and the level of activity required to break-even.
6. Discounted Cash Flows i.e. the concept of the time value of money and its use in evaluating investment options (ROI – return on investment)
7. Scenario analysis and sensitivity analysis. Factoring risk into the financial projections.
8. Compliance i.e. GST, FBT and CGT. What are they, and what records need to be kept?
9. Organisational Financial Management Practice Manual (includes amongst other things financial delegations, financial management policies and procedures)

It might seem like a lot to learn in a short period of time, but it’s not!

Now, if you don’t possess the basic accounting and finance knowledge and skill sets, perhaps you’re a large part of the problem, and may be perceived as being the ‘troll’ – the one impeding timely and effective decision making by not being able to effectively articulate and communicate a compelling argument to decision makers! If you are unable to effectively communicate the budget and cash flow implications, and the return on investment to decision makers why would you expect them to support your initiative or project?

How do you make the change from financial ‘troll’ to financial ‘wizard’?

Consider undertaking two to three days of basic financial and accounting training. There are plenty of very good courses out there covering topics such as Demystifying Accounting and Financial Management Basics. Also of great value in this area is business case writing to ensure you have every chance to get that important project over the line.

Whilst building you financial skills, don’t forget to make time to engage and build relationships with finance staff, and utilise their expertise, insight and wisdom as required.

If you suspect that your accounting and financial knowledge and skill sets need a lift, or your staff financial knowledge and skill sets are lacking, give us a call on +64 7 3003 1473 or email at solutions@tmsconsulting.com.au to discuss how we can develop a tailored course for you.