Understanding Finance is an essential part of business. Finance permeates every part of every organisation and each decision should be influenced by its effects on the costs and revenues of that business. Having the knowledge and know-how of managing the financial aspects is essential for the longevity of the business.
If you are financially aware you will be well placed for quick and effective decision making. Having the tools and analytic techniques at your fingertips to articulate the logic behind your financial decision making is crucial to get “buy in” and to achieve business goals. Due to the siloed nature of the modern workplace it is rare that you will be exposed to a wide range of financial modelling / education in the early part of your career. These tools and techniques are generally acquired later in life in more senior management roles and often learnt on the job when you are expected to know how to analyse and make decisions based on financial information.
This is particularly relevant if you are a new Director or manager, or have been selected for fast tracking to senior management and are therefore in a position of responsibility where you directly impact the cost structure or revenue generating capability of the business.
To ease this transition, it is recommended that new managers expose themselves to and learn about:
- A strategic review of profit and loss accounts, balance sheets, cash flow and budgets
- Gearing and liquidity
- Operating efficiency
- Profitability
- Client finance
- Funding and investment
- Capital project costs
- Client revenue costs
- Procurement
- Property portfolio and estates
Having good knowledge and understanding of these tools and techniques will put you ahead of your peers and help you to progress your career by making financially astute decisions backed up with the necessary analytics to help you to articulate and communicate these to the wider organisation, your clients and the management board.
Charles Ostroumoff (MSC MRICS) is Director at Arca Property Risk Management, RICS Commercial Property Board member and RICS Finance Development for Aspiring Professionals faculty member.
Develop the above financial skills by attending the RICS Finance Development for Aspiring Professionals course and see how we are supporting professionals in the built environment to position themselves as leaders in their industries on the RICS Leadership website.