Undoubtedly, budgeting and forecasting are two imperative tasks for a business's success. However, financial data can be challenging for non-financial professionals to handle, considering they might not deal with numbers on a daily basis. Budgeting is a core skill and it takes a lot of time, effort, and dedication to master. Although it may be easier to solely rely on financial professionals for this task, a company may have more to gain than it appears from training non-financial professionals in this area.
However, as a non-financial professional, planning, controlling, and understanding a budget can be intimidating initially. So, in this blog post, we will break down why and how non-finance professionals should have a financial voice.
Advantages of Budgeting for Non-Financial Professionals
You Understand The Business Financial Aspect
Stakeholders, team members, and managers who are not directly associated with budget management should be equipped with the necessary knowledge to comprehend the business's finances. This information is vital for them to make informed decisions and get a comprehensive idea of the reasoning behind the company's actions. Not to mention, if every non-financial team player understands the company’s finances, they can come up with innovative and creative resolutions to a wide array of problems.
However, sharing financial statistics and data isn't enough for the team members to make decisions – they should also know how to read and interpret it for empowered decision-making.
Corrective actions can be proactively implemented if non-finance teams have the budget knowledge. In other words, non-financial professionals must have financial awareness in order to contribute to the business’s success and revenue. With an appropriate knowledge of numbers, they can drive a clear message of how they are lending their share in business growth.
Get Yourself Accustomed to the Basics
After you have taken on a role with budgeting responsibilities, the first thing that you should do is to get accustomed to the basics. This includes the elements of an effective budget, different types of budgeting such as historical and zero-base budgeting, and budgetary variance.
If you are new to financial management without any training under your belt , the safest bet for you is to invest in some type of formal learning. This will better prepare you for the role, ensuring your path to success is seamless. To make your search easy: there are a plethora of online courses available for non-financial managers that can help in making you understand how to set financial goals, forecast revenue, and gauge performance against goals.
Knowing the Organization’s Goals
Developing just practical budgeting skills and calling it a day won’t serve the purpose. Rather, it is vital to emphasis your strategic plan as well as understand your organization’s goals. If you don’t have an idea of what you are working towards, it is impossible to manage your resources efficiently.
Simply put: If your goals are clear and specific, it becomes much easier to budget for them. For instance, if the company is into sales, one thing you may do is keep a separate and a higher budget for marketing activities. Similarly, if the company is looking to hire additional resources, funds will need to be put aside to hire Human Resource personnel.
Be Prepared for Untoward Instances
A carefully thought-out budget should be created, and it should include a strategy for how to handle potential unfavourable events.
When you are already prepared for these situations, managing them won’t turn out to be a haphazard task. One of the recommended ways as suggested by our aficionados is to leave aside a fixed amount of funds for unplanned expenses in the shape of equipment failures, labor costs, or economic trends.
While anticipating situations is beyond human control, there are things that you cannot simply overlook. In that list, a budget variance is an important aspect that should always be carefully reviewed.
Reviewing the Budget Every Month
If you need to ensure that you stay on budget always, it is advisable to review it every month. Persistent reviews of your income and expenditure will empower you to notice the variances if any. Based on this evaluation, you can make the necessary adjustments upfront to avoid any hassles later on.
What Is the Basic Financial Knowledge Required for Non-Finance Professionals?
With financial knowledge, teams can work towards achieving the company's goals. Plus, it empowers them to have a clear picture of the business’s financial health.
Here is some basic budget information that non-financial professionals should learn:
- Interpreting Balance Sheet, Cash Flow, and Profit/Loss statement ( financial statement)
- Evaluating ROI from projects
- Cash Budgeting
- Help them in Pricing decisions
Subsequently, non financial professionals can help the business in the following ways:
- Using the information acquired from the company’s financial statement to make educated decisions.
- Understanding the financial feasibility of the project.
- Understanding the company’s cash flow and working capital.
- Monthly budget compilation as per the business operational plans.
- Aligning the upper management strategy using financial statement information
- Effective investment decisions for the company.
Teaching financial knowledge to non finance professionals can significantly benefit the company’s growth and success. Thus, businesses should have a sound strategy to ensure that non finance team members understand budgeting fundamentals. Hiring an expert consultant that offers customized financial concepts knowledge according to your business unique needs can lead to unprecedented success.
Final Thoughts
Financial knowledge offers a plethora of benefits to the organization. It helps non finance team members be a part of crucial decision-making, creates a great learning experience, and most importantly makes them feel more confident.
If you are looking for the right financial advisors that help you achieve business goals within the scheduled time, look no further!
Black Swan Consulting, Inc is a leading consulting firm offering high-quality financial services to busy entrepreneurs. We can help non-finance professionals understand the numbers that matter the most to your business and empower them to make educated decisions. As a pioneer consulting firm, we have expertise in business development, strategic planning, government contracting, and financial planning.
No jargon, No cognitive burden for non financial professionals. To learn more, get connected with us today!