Coherance of Finance Metrics
- Can we grow and still be profitable in times of uncertainty?
- Can we innovate and achieve our financial goals as well?
- What is actually profit? Is it the same as cash?
- How can we make our stakeholders happy? By the way, who are the stakeholders?
- What is our long-term strategy and short-term operational objectives? Are they in line?
- Does every member of our team understand the strategy? Do they know what they should do to support it?
While many organizations will struggle to define and communicate these fundamental and vital questions, others will be proud to refer to their annual reports, investor analysis and internal memorandums and prove that these fundamentals are well thought and documented, at least by senior management. But we know that senior management is aware of only 4% of the problems in the organizations, middle management about 9% and only the operating levels know them all.
So, it is imperative that any organization that decides and documents on their financial fundamentals that will help make the strategic objectives but it is even more crucial that all the troops also understand and support them and aligned to make them.
When the CEO declares ‘’our focus is growth and sky is the limit’’, the supply chain planner understands more units to ship, sales rep understands more prices to cut, accounting understands more reports to reconcile, treasury understands more forward contracts to engage, etc. And how all these different looking and crucially metrics are defined and reconciled.
Half of the Fortune 500 companies on the 1954 list don’t exist at all today. Not because they did not have a greatstrategy! Global organizations have become so big and complex that congruence of the financial metrics have become even vital than ever. Congruence of the financial metrics mean; all troops speak the same financial language meaning they are all aligned and working in the same direction.
It has been observed that, contrary to the general belief ignorance level of the organization about the problems that exist, is like an iceberg and the higher you are in the organization, the less you are informed, particularly about the financial metrics.
Whether you are a global business or an NGO or a public organization, of different size and scale, you will have a purpose of existence. What finance does is to translate your business objective and plans into a financial plan that includes all areas like planning, budgeting, pricing, cost management and financing your operations with the appropriate financial metrics that are planned, measured and managed realization if which will also help you to achieve your business objective.
So, information should be from top to bottom and from bottom to top in a coherent and consistent way and “speaking the same language”, especially in financial terms and metrics (profit, cash, return on investments, budget/actual rate, dividend, expenses/costs, etc.)
In cooperation with KnowledgeTrack, Swiss Business Institute Sarl will deliver a one-hour free webinar on january 28th, at masteringknowledge.com in advance of a 2 full day live on-line training
This free webinar will help you to:
- Emphasize the criticality of using the same language in finance
- Understand basic concepts and terminology of accounting and finance
- Become familiar with basic financial statements
- Be able to use analysis tools in evaluating financial performance and investment proposals
- Better understand financial implications of business decisions
- Improve and master financial planning process for business
This course is developed to equip non-finance corporate leadership with the required financial concepts, tools and techniques through a model of seminar, pre- and post-training reading and assignments and exercises.