Whether or not you’ve been involved with accounting in a professional capacity, you’ve probably heard it referred to as ‘the language of business’. So why is this, is it justified, and how should we respond as professionals?
Does money really talk?
Finance is a major concern for those at the top of today’s organisations, meaning that many of the discussions concerning growth and success are related to money. But increasingly, there is heated debate concerning organisational motives, and whether business activity should be geared towards profits or positive social impact.
Reckless banking, austerity measures, and large-scale redundancies have understandably left a bad taste in many people’s mouths. The events of recent times have certainly taught us the danger of an obsession with the bottom line.
But the other extreme makes as little sense. By forgetting financial health and focusing solely on providing jobs and services for communities, we can do neither of these things for long.
Accounting is not the be-all and end-all, but it is a vital part of the equation when it comes to running a successful organisation, as can be seen in the close relationship between finance and functions like marketing. Our businesses shouldn’t be profit-making machines and nothing else, but without funds, there is no business, and therefore no potential to have positive influences in other areas.
Alongside ensuring profitability, business leaders must work hard to protect and deliver value to all stakeholders, from employees to suppliers, and not just shareholders. In fact, doing so is itself fundamental to productivity, and therefore to financial health.
As we’ve seen, finance is not the only ‘language’ businesses should be utilising. They must communicate on a variety of levels in order to flourish, including a more personal, emotional level that engages each employee and each stakeholder with the broader vision and goals (we develop this ability among leaders on our tailored leadership mentoring programmes).
However, it’s also clear that having a solid financial strategy is imperative. Some of the worst financial disasters of the last few decades have been due not just to greed, but incompetence, and this means the biggest movers and shakers should have a good understanding of financial concepts.
In fact, we probably need to go further than this. Most departments are closely, and often directly, linked with an organisation’s finances, and professionals in these areas could also stand to benefit from developing their knowledge.
For example, marketing, sales, and operations, all major functions within most organisations, are closely interlinked with finance, and each employee in these areas makes decisions that impact on monetary resources.
In many cases, then, it may be worth investing in developing accounting knowledge in colleagues outside of the finance team. Our distance learning course, AAT Accounting Skills to Run Your Business, could help staff across the business develop the awareness they need to make financially viable decisions.