If you’re like most non-financially-minded individuals, learning about finance and accounting is probably the last thing you plan to willingly do. But unless you and your team are content to remain in lower-level positions, you probably want to keep reading.
The reality is, it’s unrealistic to expect to be successful at higher levels of management without at least a basic understanding of business finance.
Why? It’s no secret: businesses operate based on strategic decisions that are often financially motivated. If you don’t want to be the one with nothing to add to the discussion, then you might want to consider taking the initiative to invest in improving your financial knowledge.
I can feel you cringe. In fact, this is a common reaction for most non-financial professionals. And believe me, I get it. I’ve spent over 10 years learning about finance and in all these years, I don’t think I ever took a course I’d consider lively.
I guess you could say all that time and effort taught me a thing or two about what works and what doesn’t when it comes to learning finance.
The five most common complaints about learning business finance
We’ve asked participants (before taking our financial training program) what their worst nightmares are about learning finance and have put together a list of the five most common complaints:
- It’s dry and boring
- It’s difficult and confusing
- I’m just not a numbers person
- Why do I have to understand finance when we have finance people who can handle the numbers?
- I work hard and do my job well, why should I care about the financials?
As training and consulting professionals (some of which are financial experts), we, of course, take this to heart. The funny thing is, we completely understand each of these complaints and hear them all the time from prospective clients.
In an effort to help you make the process easier, we have put together some suggestions to help you evaluate financial training programs and provide insights into what you should be looking for to get the biggest bang for your buck.
How to evaluate a financial training program
What if we told you that learning finance didn’t have to be dry and boring or difficult and confusing? Or that even if you’re not a numbers person, that you can get it too?
What if you might even be able to surprise those finance geeks at your next discussion by showing off your understanding of the topic? The truth is, it doesn’t have to be a terrible experience, but you have to be willing to take the time to find the right training program for you.
Finding a finance training program that isn’t boring
When evaluating an online course, a book, or a live financial training program, the first thing you should ask is: Who developed this program?
If a team of financial experts developed it on their own, it’s pretty likely to be the boring training that you and your non-financial colleagues always feared. No offense to financial experts, its just that many finance geeks (myself included) often enjoy learning about things like depreciation and goodwill. Because of the way we think, it’s often challenging to understand why others just don’t seem to ‘get it.’ But, being an expert doesn’t necessarily mean teaching will come naturally.
Sadly, most financial training programs are developed by experts and not much thought is put into making the topic digestible for people who think differently – and that’s exactly the problem. If most financial experts were good at teaching others about finance, don’t you think more people would understand it?
You probably are thinking, ‘Aren’t you a financial expert?’ The answer is YES, I am. And lucky for our clients, I did not design our financial training program! It was developed by a group of individuals that specialize in experience-based learning techniques, along with financial experts such as Certified Public Accountants. This team noticed how most people feel about learning finance and accounting and they wanted to create a training program that made the learning experience fun and interactive.
What you can do:
Avoid training programs developed by financial experts. Instead, focus your search on finding a training program that utilizes an effective teaching methodology that you believe will work for your team.
Make sure the training program is VERY interactive and has activities to facilitate learning. Most of us learn through experience. Yet, so many finance trainings are done using PowerPoint or lecture-based format. We find that this type of passive learning is where many training courses go wrong. Finance is way too complicated to be effectively retained when taught in this format. We recommend making sure the training you select uses lots of interactive activities to accelerate the learning.
If you’re interested in learning more about how we teach finance without PowerPoint, check out this video clip to see our live programs in action.
Make sure the program is FUN. What? Yes, FUN. I know, you’re rolling your eyes thinking that it’s not possible to make learning finance fun. I tend to agree if we’re talking about the way most programs are run, but there are plenty of teaching techniques that make even the driest of topics interesting.
If you don’t believe me, you can read some testimonials to hear what participants have to say about our financial training program. But seriously, find a program whose participants think it was the most fun they’ve had learning finance. That’s how your people will retain the information.
How to address the difficult and confusing argument
Finance is difficult and confusing because most people do not know how to explain it in common language. It’s kind of a language of its own. I won’t lie, it is complex and our financial reporting system continues to make it more complex all the time. But the fundamentals are not and that’s all non-financial professionals need to understand to help them be more strategic and financially minded when making business decisions.
I can imagine that finance departments all over the world have spent way too much time explaining financial concepts to non-financial professionals with the hope of creating more common ground when discussing budgets, contract terms, receivables, turnover, etc.
As discussed earlier, just because one understands the concepts, doesn’t necessarily mean they will be able to explain them or teach them to someone else.
What you can do:
Again, avoid financial training programs that are designed and delivered by finance experts, including your in-house finance team. While we all want to believe we can get what we need from the resources we already have, sometimes, our own finance team may not be suited to provide the effective financial training needed.
If you plan to use your in-house finance team, just be mindful that your finance team works extremely hard in their day-job. Finding time to focus on creating an effective financial training program may not be their top priority.
Plus, those who are inexperienced at teaching finance (especially those that know a LOT about the subject) may inadvertently over-complicate things and/or get sidetracked by irrelevant or complex details that could lead to more confusion.
Your in-house finance team will be relieved if you take this burden off of their plate and it’ll make their lives easier in the process. They might even thank you after.
Find a program that teaches finance by using the balance sheet as a teaching tool. Most programs (that I’m aware of) focus on teaching participants the income statement, likely because it’s the statement most non-financial professionals are measured against.
Here’s why it doesn’t work: an income statement is just a page of financial terms with numbers on it. Sure, it shows you the bottom line, but the statement itself is static and provides no way to explain how those numbers got there or what any of them actually mean.
Unfortunately, many financial training buyers specifically look for this, as they want their people to understand only the information deemed relevant (often a well-intentioned attempt to avoid information overload). Don’t get caught in a similar trap! It’s actually easier to learn about the income statement when focusing on the balance sheet.
Why? The balance sheet is the only financial statement that is affected by every single transaction that occurs in a business. It’s essentially a roadmap for understanding how your business works from a financial perspective.
Every company starts with assets (a balance sheet item). Using the balance sheet, you can explain how those assets go from raw materials to products; then are sold to produce revenue and profit; and then ultimately are converted back into cash.
Focusing on the balance sheet allows the learner to take a holistic approach to understanding core financial concepts and will help give them a full picture of how it all comes together. Then it’s possible for them to process things like why it’s important to negotiate better contract terms, improve receivable days, or reduce how long it takes to convert sales into cash flow at your firm.
Why you don’t have to be a numbers person to learn finance
Many people that need a financial training program do not consider themselves a “numbers person.” In our experience, working with big numbers (at least at first) makes people’s eyes glaze over. Thus, it’s important to find a program that miniaturizes the numbers.
What you can do:
Miniaturize the numbers and keep it interactive. Make sure that even if a program is customized to your business and uses your financials, it doesn’t use the big numbers to teach the core concepts. In addition, an interactive program will help drive home concepts that a simple review of numbers and accounts just cannot provide.
Why non-financial professionals need to understand the basics, even if they don’t want to
Today’s business world moves at such a fast pace that change is constant and happening rapidly.
We recently drafted a proposal for a medical supply company that wants to teach finance to its sales force because they’ve just completed the design of a number of products that are expected transform the medical/insurance industry. The products will make it more economical for doctors to charge patients directly for services (without having to go through insurance companies). This change is huge!
The question then is, will the company’s sales people be able to communicate these financial benefits their customers? Not likely if they don’t understand finance! The key here is that other companies are developing similar products, so success in this case, will likely be granted to the companies that provide their team with the right tools and skills they need to succeed.
This is just one example, but many industries experience similar changes thus, it is critical that everyone at your firm understands and can communicate financial information.
What you can do:
Give all of your professionals financial training. Begin with asking yourself: What is changing in my industry? Is my team prepared to alter their approach? If not, what training do my people need to make sure they are able to address these changes? Seek out an independent consultant if you don’t know where to begin.
Why you should care about understanding finance
I’m not sure I can convince you to fall in love with finance, but, I imagine you may be willing to embrace it if given the opportunity to learn the topic in a way that makes you feel like you ‘get it’ and that empowers you to make better, more strategic decisions.
You might find that learning and using finance is not so terrible after all. It may even help you get the promotion you’ve been wanting or help you better understand your personal finances.
Why should you care? You never know who is going to come up with the next best idea or innovation that revolutionizes your business. Maybe that person is you. Innovation is expected from management, but it can also come from those on the frontlines who understand your company’s products and services, but not necessarily how they make you money.
Imagine what would happen if they did.
Jocelyn Gilligan, CFA is a Director at MetaMark Learning. She is a Chartered Financial Analyst that started her career with Ernst & Young, LLP and has over 10 years of experience working in finance and accounting. Having worked in Colorado, New York, Shanghai and Hong Kong, Jocelyn brings a wealth of knowledge of financial concepts as well as financial analysis to MetaMark Learning.