Analyzing financial statements, managing cash flow, budgeting, maintaining financial records, and other accounting activities can seem either mundane or daunting, especially to non-financial managers. However, basic know-how of accounting concepts and practices are beneficial for making informed business decisions. Additionally, they are critical to the functioning of any business. This blog discusses the major challenges in accounting for non-financial managers and the top five account skills they should learn.
What are the Accounting Challenges Faced by Non-Finance Managers?
While accounting is a tough skill to acquire, several factors, such as stringent accounting regulations or changes in accounting standards, can make accounting for non-financial managers even more difficult. Let us explore the significant accounting challenges non-finance managers face:
Increasing Accounting and Financial Reporting Requirements
Due to expanding business activities and increasing financial frauds, regulatory bodies across the globe are increasing accounting and financial reporting requirements for businesses. Hence, it becomes challenging for non-financial managers to stay current on the latest rules and guidelines constantly. Moreover, they often find understanding and interpreting these requirements difficult, leading to potential errors or non-compliance. This is why continuous learning and staying informed about accounting practices for non-financial managers is crucial.
Stringent Accounting Regulations
Corporate frauds are also one of the primary reasons for accounting regulations becoming more stringent for businesses. Non-finance managers struggle to navigate these regulations, which are often complex and subject to frequent changes. However, failure to comply with these regulations or other non-compliances can result in legal and financial consequences. Therefore, non-financial managers must learn applicable accounting regulations and practices.
Use of Technology in Accounting
The increasing use of technology is another significant challenge related to accounting for non-financial managers. The growing use of accounting software, data analytics tools, and automation requires managers to have a basic understanding of these technologies in addition to accounting knowledge. Non-financial managers may need to learn new software systems, interpret data generated by these tools, and effectively collaborate with finance teams to utilize technology for financial analysis and decision-making.
Data transparency and analysis are crucial elements for fair and correct accounting practices. Non-financial managers often struggle with accurately interpreting financial statements and understanding how their decisions impact the organization’s financial position. It results in a lack of transparency during financial reporting and inefficient decision-making processes. Therefore, managers require basic accounting skills to communicate financial information transparently within their teams and to other stakeholders.
Understanding Tax Laws
Accounting also requires a basic understanding of tax laws subject to frequent changes. As non-financial managers do not know about tax, they cannot interpret tax laws correctly. This can affect tax planning, compliance, and managing tax risks. As a result, non-finance managers always depend on advice from tax professionals, which increases costs.
5 Basic Accounting Skills Non-Finance Managers Must Possess
The following are the top five skills of accounting for non-financial managers to master to overcome the above-mentioned challenges.
Financial Statement Analysis
This skill involves analyzing the income, balance, and cash flow statements. Additionally, it requires expert knowledge of financial performance, liquidity, and overall health of the organization. Financial statement analysis helps identify the key financial ratios and trends that enable non-financial managers to make informed decisions.
Budgeting and Forecasting
The key responsibilities of managers include developing budgets and forecasts. It involves setting up a budgeting process, analyzing financial goals, estimating revenues and expenses, and allocating resources effectively. Moreover, managers must monitor actual performance against the budget and identify variances to take corrective actions when necessary. All these are integral concepts of accounting.
Cost Analysis and Control
Managers are also responsible for cost analysis and control for their respective departments. Therefore, it requires knowledge of the different types of costs (e.g., fixed, variable, direct, indirect) and their impact on the organization’s profitability. This skill helps non-financial managers analyze cost structures, identify cost-saving opportunities, and implement strategies to control and reduce expenses.
Cash Flow Management
This involves analyzing and forecasting cash inflows and outflows to maintain cash liquidity. In short, cash flow management helps managers learn the impact of cash flow and the factors affecting it, such as revenue collection, payment terms, and capital expenditure decisions.
This is another key skill related to accounting for non-financial managers. It entails conveying financial information to various stakeholders. Financial communication helps managers learn how to translate financial data into meaningful insights and present financial reports. It enables them to communicate and convey a clear understanding of the financial performance of their respective departments. It also facilitates discussions around financial performance.
What are the Latest Trends Accounting Professionals Should Know?
As new technologies grow, economies change, and business trends suddenly move, accounting trends and practices also keep evolving. Therefore, while learning practices of accounting for non-financial managers is essential, it is also crucial to stay up-to-date with the relevant trends.
Let’s analyze the latest trends in accounting for non-financial managers as well as finance professionals.
While software related to accounting for non-financial managers has been used for years, there has also been an increase in cloud-based account software of late. Most of this software type is designed as an Enterprise Resource Planning (ERP) system that helps track data of an enterprise’s financial transactions. This is the same as desktop accounting. Furthermore, the entire data is stored in the cloud for easy accessibility and transparency.
Integration of AI in Accounting
In addition to using Artificial Intelligence (AI) for streamlining business operations, organizations also integrate this technology to automate accounting tasks. This is highly beneficial in accounting for non-financial managers. AI tools help gather, sort, and analyze data and reduce manual efforts. Moreover, AI-based accounting tools also prepare accounting reports that mitigate the risk of errors and boost overall efficiency. Therefore, learning to use AI tools in accounting for non-financial managers can significantly reduce workload.
Financial data is highly confidential information organizations must protect at all costs. Hence, organizations are spending considerable amounts on data security frameworks and tools, data protection, and cybersecurity training for the workforce. Even non-financial managers play a crucial role at this stage: They must train and encourage their team members to protect data.
What are the Benefits of Learning Finance With Emeritus
Emeritus offers skill-oriented financial courses in accounting and financial analysis for managers and business leaders. Learning accounting through Emeritus’ finance courses can help you:
- Gain practical insights and relevant knowledge of the latest accounting trends and skills
- Learn best accounting practices taught by industry leaders
- Be more effective at leadership and management as it requires accounting, budgeting, forecasting, financial analysis, and other basic financial skills
- Improve decision-making for your team, which promotes career growth
To sum up, Emeritus’ finance courses offer skill-based learning related to accounting for non-financial managers and facilitate leadership and management growth. Enroll today and enhance your career by gaining accounting knowledge. Remember, your financial background is no bar!
By Sneha Chugh
Write to us at firstname.lastname@example.org.