Finance for Managers Training

Why?

Better Decisions = Better Performance

From "Financial Intelligence", Berman and Knight "Financially intelligent managers contribute to a business's health because they can make better decisions. They manage resources more wisely, use financial information more astutely, and thereby increase their company's profitability and cash flow. Financially savvy managers can react more quickly to the unexpected. When people understand a company's objectives and work to attain them, it's easier to create an organisation built on trust and a feeling of community. Financial training - an increase in financial intelligence - can make a big difference Knowing the rules - how profits are figured, why return on investment matters to shareholders - lets you see your work in the big-picture context. You'll see more clearly how the company that you're part of operates. You'll want to contribute to it, and you'll know how to do so. You'll be able to assess your performance better than you could before, because you can see which way the key numbers are moving and understand why they're moving in one direction or the other. Then, of course, there's the fun of it ..."

Linking Cause and Effect?

The difficulty for many managers is that they cannot see the link between the decisions they make and the organisation's financial results. And if this is the case, how can we expect them to make financially astute decisions?

Our courses are designed to remove the question marks so that your mangers:

• are able to balance short-term profitability with long-term value creation. (For instance, cutting the training budget will most likely improve this year's profitability and cash flow. But how can you show that it will harm future performance. Not anecdotally but in a way that the finance director will accept?)
• can justify investment decisions with payback over several years
• understand the real performance drivers in the business - many of which don't appear in the financial statements, such as relationships, culture, skills and knowledge.
• recognise the critical importance of cash flow and working capital
• are able to undertake what-if analyses and balance risk and return
• know how to evaluate opportunities and when necessary cut the right costs

In short, our courses will:

• improve the quality of decision-making
• enable managers to act more quickly and with greater confidence
• provide a sense of context and a greater strategic understanding
• help to develop a common results-oriented language with the organisation

Overview

Companies need a new approach to finance if they are to compete successfully and grow the value of the business in real, rather than accounting, terms. commercial-awareness.com workshops get behind the numbers and uncover their real meaning. Common themes are:

• value management

The traditional financial statements and ratios were fine during the “industrial age”; nowadays they can give a very misleading picture. For instance, on average, 75% of the value of a company does not appear on the balance sheet. The real value in a company lies not in its balance sheet assets but in the skills of its people, its accumulated R&D knowledge, relationships, brand, systems. Managers must fully understand the concept of “value” if they are to make sense of “finance”.

• performance drivers

Financial analysis using ratios should be placed in a broader framework. Financial ratios are based on historical data and are therefore a crude indicator of future performance. In addition, they track “symptoms” not “causes”. To illustrate: a reduction in profit margin tells you that you are making less on each sale but it does not tell you why. However, analysing “performance drivers” – for example, how many visits made by a salesman – will point towards “causes”. This is the approach of the “Balanced Scorecard” and this “balanced” perspective is a recurring theme of our programmes.

• a sophisticated enterprise model

In our finance courses we use a spreadsheet showing how the various elements that drive financial performance fit together and affect each other - in fact delegates build this model from the a blank spreadsheet. The impact of real world inputs, such as an increase in the average time it takes for customers to pay or reducing the number of sales people, can be seen throughout the financial statements – the impact on cashflow, the balance sheet, ratios and so on. As we progress through the course, each new aspect is considered in the context of the model, thus helping delegates to "fit the pieces together".

• more than numbers

"The point is simple: if you want to know what your future cash flow will look like, investigate where it comes from - the market. A farmer whose livelihood depends on a river flowing through his land will be concerned with the upstream situation, especially if the river could be diverted to a neighbour's property. Yet this is exactly where many boards give too little attention. Our research shows that companies that look to the sources of cash flow - those that think about the market - are more profitable."
Tim Ambler We emphasise that the “numbers” are only representations of a much more complex reality. As an example, a revenue forecast should not be simply last year plus 10%, it should be constructed from a deeper analysis of the factors that influence customer buying behaviour.

• practical tools

The primary objective of our courses is not to turn managers into accountants; it is to give managers a balanced financial perspective and a set of practical tools that they can use to generate sustainable success.

Course Outlines

The basic aim of the commercial-awareness.com courses is to provide managers with the core skills they need to analyse and interpret accounts, create budgets and plans and evaluate projects. An holistic approach is taken, examining the forces that shape the “numbers” and exploring the impact of different management decisions on the financial health of the organisation. In particular, I stress the importance of intangible performance drivers – brand, relationships, skills and knowledge – critical assets that do not appear on the balance sheet and yet in most organisations constitute most of the value: financial analysis should reflect the real world.

To have a true grasp of finance requires some understanding of where the “numbers” come from. For instance:

• how will forecasts be affected by competitor moves, product lifecycles, response rates to promotional activity, branding etc.
• how can training be justified
• what are the cost implications of a strategy based on high levels of customer service (staff levels, training, hours of work etc.)
• how will cash flow be affected by new product launches

Please click on mindmap for larger image.

commercial-awareness.com's expertise in marketing and strategy ensures that finance programmes are anchored in the real-world. Participants understand the actual drivers of financial performance, the inter-dependencies and the cause-and-effect relationships that exist within organisations.

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Course Outline

Finance for Managers

Managing for Value

Managers need a broad perspective if they are to compete successfully and grow the value of the business in real, rather than accounting, terms. The commercial-awareness.com approach focuses on: value management - the traditional financial statements and ratios were fine during the “industrial age”; nowadays they can give a very misleading picture.

"Accounting profits encourage an excessively short-term view of business. They also encourage an under-investment in information-based assets - staff, brands, and customer and supplier relationships.

In today’s information age, the accounting focus only on tangible assets makes little sense now that these intangible assets are the overwhelming source of value creation."
Peter Doyle

We place customers and the concept of Customer Lifetime Value (CLV) at the centre. By focusing on revenues and the costs of acquisition, retention and service we cut straight to the heart of the matter. With customer satisfaction as a key driver of loyalty we explore the relationship between shareholder value and, for example, answering the phone in under three rings.

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Course Outline

Managing for (Shareholder) Value