Finance for non-finance graduates is getting high in demand because today everyone has to understand finance at a basic level.
“Finance” The elephant in the room is
Isn’t it? It is deemed quite difficult to grasp by people from non-finance domains like marketing, operations, HR, etc. Hence, there’s a general resistance shown by non-finance graduates towards learning financial concepts. However, there are a lot of advantages if an individual decides to devote some time to acquiring knowledge from the domain.
This will prove to be invaluable and create the edge for candidates vying for upper management positions in any organization. Proper development and training of employees is very important and have become an essential aspect of every organization where they train the employees to deliver the best out of their potential.
Key Reasons why knowledge of finance for non-finance graduates is a must?
1. Understand basic financials
A manager needs to run his project under a set of budget constraints approved by the client. To judiciously utilize the money, he needs to identify his/her resources and subsequently check the cash spending on activities. Hence, without having a basic knowledge of finance, a non-finance manager would be handicapped in decision making thereby hampering him (or her) from identifying the possible roadblocks.
2. Read a basic balance sheet, income statement, etc.
A non-finance manager also must be able to comprehend a balance sheet and its components like various assets & liabilities. Similarly for the income statement, identifying the healthiness of the company’s cash flow, the company’s debt structure investment, etc. Such knowledge is vital while presenting proposals or presentations to potential clients.
3. Investment options
On a personal front knowledge of terms of finance for non-finance graduates holds due importance. While investing in the stock market, at least a basic overview about finance terms like salvage value, depreciation, NRR, IPV, etc., the average return on investment for the industry over the past 5 financial years, its fluctuations and regulatory shifts like GST, demonetization and how they affect your various investment options are mandatory.
Even if you invest in mutual funds because a fair view of the aforementioned factors is vital to make sound financial decisions.
4. Cost accounting techniques
Cost accounting refers to analyzing and above all allocating the various costs associated with a certain project. In addition to that, it is developing a course of action to control these overheads. The decisions taken by managers depend on the interpretation and analysis of these results obtained by tracking these activities and their respective costs.
An additional incentive for future
Imagine yourself graduating as an MBA from a business school and being appointed as a manager to a project in say, an industry like manufacturing, pharmaceutical, FMCG, IT, etc. For you to lead a team of individuals, you need to have a grasp of the various financial and resource-oriented constraints of the project along with the nature and dynamics of the industry.
Now is the time for you to start understanding the client’s needs and allocate resources appropriately. For example, Financial Literacy Program helps a lot in this regard.
Now, your work will be better structured and well-analyzed and the chances of an increase in overhead costs will below.
To move through the corporate ladder, you need an eye for detail by looking at things from multiple perspectives. For an organization to be profitable, contrary to popular beliefs, every department shouldn’t operate at its optimum best.
Local efficiencies don’t matter because the organization as a whole is failing to meet its objectives.
An upper-level manager needs to have a mental mapping of the working of various departments. This helps in going through their financials easily for verification.
He should know how to use the numbers at hand to arrive at a basic financial conclusion, to say the least.
A Jack of all trades is whom companies want amongst leadership roles in their communities. Someone who can be a bit of everything is what the corporates are looking for. For instance, someone like you, probably!
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