WHO WE ARE?
New business leaders and managers have to develop at least basic skills in financial management. Expecting others in the organization to manage finances is clearly asking for trouble. Basic skills in financial management start in the critical areas of cash management and bookkeeping, which should be done according to certain financial controls to ensure integrity in the bookkeeping process. New leaders and managers should soon go on to learn how to generate financial statements (from bookkeeping journals) and analyze those statements to really understand the financial condition of the business. Financial analysis shows the “reality” of the situation of a business — seen as such, financial management is one of the most important practices in management. This topic will help you understand basic practices in financial management, and build the basic systems and practices needed in a healthy business.
Basics of Financial Management
Role of Treasurer and Board Finance Committee
If your small business is a corporation, you would do well to find someone experienced in financial management and encourage them to be your board treasurer (your board chair has this responsibility to find someone suitable, as well). Therefore, it’s important to understand the role of the board treasurer.
Getting an Accountant or Bookkeeper, If Needed
If you are inexperienced in financial management, then you should get an accountant initially to help you set up your bookkeeping system, generate financial statements and do some basic financial analysis. But don’t count on an accountant to completely take over your responsibility for financial management! The accountant can help you set up a bookkeeping system, generate financial statements and analyze them, but you have to understand financial data to the extent that you can understand the effects of your management decisions, the current condition of your business and how decisions will effect the financial condition of your business in the future.
Buy Accounting Software to Help You?
Strongly consider getting a software package to manage your books! There are a number of very useful software packages that will help you automate bookkeeping, generation of financial statement and their analysis. Note that an accounting software package can greatly reduce the time to enter and manage accounting transactions, and generate financial statements. However, you still should have at least a basic understanding of the accounting process for your organization, including what journals are used and what general accounts exist. You must have good understanding of financial statements and how to analyze them — an accounting package cannot do this for you!