Aug
09
2019

Finance Education for Business Executives

Whether you are in sales, operations, or managing technology in an organization, as you grow in your career, you will be required to make financial decisions. What’s the best way to allocate the team budget? How can the company maximize its return on investments? Can the company afford to make capital investments? These are some of the questions that are not limited to just the finance professionals.

As the world of business becomes more complex, all the employees of the company are expected to be able to speak the language of finance and accounting to make the system more efficient.

Lack of basic financial understanding can seriously hamper your growth prospects. Even if you have all the skills to become a CEO, if you can’t read and interpret a company’s balance sheet, you don’t stand a chance to get that coveted position.

There are various ways to equip yourself with what you need to know about finance as a business executive. The first step towards your finance education is to grab a book that teaches you the basics. There are plenty of good books that have been written with non-finance professionals in mind.

Most business schools offer part-time Executive MBA or other executive programs for working professionals. This is a good option as you study from the experts, and also earn a degree or certificate at the end of the program.

The objective is to get decent knowledge of finance and accounting and be able to apply it when required. Let’s take a look at some of the important concepts that you need to know as a business executive. First and foremost, you need to realize the importance of finance and accounting function and the difference between the two. You also need to know some basic accounting terminology, such as double-entry accounting, debt, credit, assets, and liabilities.

The most important thing that you need to know is how to read and interpret the key financial statements of a company. The three commonly used financial statements are balance sheet, income statement, and the statement of cash flows. As a senior business executive, you are expected to know these statements, and how they are interrelated with each other. Based on your knowledge, you should be able to pick up the key financial data from these financial statements and use it for making key decisions. For example, if you are in a meeting discussing a future project, you should be able to take a call on whether the firm is able to finance this new project, depending on how much the company already owes, or how much profit the company has retained. Apart from these you should also have some knowledge about costing and budgeting techniques.

In summary, having a grasp on the key finance concepts and your ability to interpret financial data can provide a significant boost to your career and enhance your reputation among your colleagues.

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Aug
02
2019

Personal Finance Series: No 23 – Sick to the Stomach With Statutory Demands?

The sizeable debt problems in the UK and USA are well documented and are growing so quickly that quoted statistics become quickly obsolete. In Ireland, the issue is a growing problem too, and in all 3 countries, charities and government sponsored bodies set up to handle debt problems are over run with enquiries.

The credit industry and their relentless lending, collection and recovery methods created a debt management solutions industry where companies represent their clients to creditors in return for a professional fee. These debt management companies can provide debt consolidation counseling, and if chosen carefully, can be very helpful and professional.

Our lifestyles are dominated by borrowing and servicing debt, finance charges and fees.

The Dangers Of The Debt Spiral

The Debt Spiral starts off when a new credit card arrives in the post. Most people believe that because their credit rating ‘passed’ the lender believes that they can afford to have it, why else would it have been issued? So false authority is given immediately to a piece of plastic and the belief “It’s all right” is seeded.

Constant usage seeds a habit, then a behaviour until clearing the monthly balance becomes difficult. The next downward stage is to make part payments, and finally only the minimum payment each month. Interest on Interest quickly compounds and the minimum payment does not make any significant impact on the balance. This gets repeated on average over 3 of 4 different cards, until the average debt payments become a burden.

Then in that situation, a life event happens and the money funding the repayments stops. Yet the interest, demands and bills are relentless – building and growing. Matters at this stage become desperate.

How To Get Out Of A Desperate Situation

There are a number of options, which largely depend on the personal finance statement. The first thing to do is grab a clear hold on the money in and the money out. Consult the personal finance budget software online and make lifestyle adjustments.

As things deteriorate, renegotiate with each creditor for breathing space, or seek professional help from a debt consolidation counseling centre who can walk you through all sorts of tools. Tools like a debt snowball calculator, an affordability calculator, financial goal setting and a range of insolvency options to suit the circumstances.

How To Become Debt Free Forever

Common sense dictates that living within the money available each month is the way to do this, yet so many do not. The first task is to create some ‘wriggle’ room. Pay off the most expensive debts with as much as is available to do so, then transfer to the next and the next until it is done.

Next, turn all these repayments to the capital on the mortgage and it is entirely possible to become debt free in less than 10 years, and owe nothing.

Why Your Parents Were Wrong About Debt

Previous generations didn’t encounter the credit culture we all live in today. Their values are still worth following in that if you couldn’t afford it, you didn’t get it. However, debt can be harnessed and managed if understood properly. This issue isn’t debt, it’s unmanagable debt.

Subscribing to a money management system, like the kind provided by personal finance budget software online is an easy way to keep track on money. With the right tools, debt, charges, and fees do not need to be things we fear

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