Having skills for one’s job in a corporate is vital, but that is not all. The modern-day business environment is way more competitive than it was a decade ago and demands that besides their designated roles, the employees should have basic knowledge of finance, which will help them become pro-business and profitable. Corporate finance practical training for non-finance employees is becoming a critical aspect of business management.
Awareness and understanding of finance by the employees make a difference in business. Here is how.
Three things are essential for the growth and financial health of a corporation. They are:
- Increasing the value of the firm to the shareholders
- Maintaining healthy cash flow to attract funding for expansion
- Quick decision-making by the managers to make the best of the situations
Since finance is the underlying element in each of them and it takes a focused involvement of all stakeholders for sustained performance, a lack of financial literacy often leads to improper decision-making. Without a financial foundation, non-finance employees may not be performing their duties as well as they could, and they may not be optimizing all the potential opportunities possible.
According to a survey of 9,000 consumers and business leaders conducted in 14 countries, financial literacy is low regardless of age, gender, or country, and this bleeds into the workplace. The majority of people claim to manage personal and business budgets with little to no formal financial training. The majority of people learn about finance on their own or through trial and error—and 39% continue to learn. Given that eight out of ten respondents say they never learned about money in school, financial literacy is a business challenge with real-world consequences.
Why poor financial literacy is a big disadvantage at work
Employees who are struggling to manage their personal finances often bring those struggles to work. This lack of knowledge of finance in the workplace can affect entire departments and introduce errors that affect the bottom line. Non-finance department heads, for example, who manage their own budgets, profits, and cost centers may miss warning signs that the numbers they’re working with aren’t accurate and make poor decisions as a result.
In a startup
During the startup phase, the majority of businesses incur losses and have negative cash flows. During this period, financial management is critical. Managers must ensure that they have enough cash on hand to pay employees and suppliers, even if more money is going out than coming in during the first few months of business. This means that the negative cash flows must be factored into the financial projections in order to account for enough capital to keep the business running smoothly.
A business will require more money as it develops and grows to finance its expansion. It’s crucial to plan and budget for these financial requirements. Well-disciplined financial management on the part of the directors and managers is necessary for making decisions regarding whether to finance expansion internally or borrow from external lenders, maintaining a respectable credit rating, locating the best source of funding at the lowest cost, controlling the company’s cost of capital, and avoiding letting the balance sheet become overly leveraged with debt.
In a corporate scenario
Many business leaders and CEOs are not from a financial background, although they are supposed to take major decisions to directly impact the bottom line of their businesses. Exposure to corporate finance equips them with analytics and tools, which are extremely helpful in the corporate world due to:
- distribution and prioritising financial resources.
- maximising the value of your firm.
- Better handling of operations with informed decision-making.
- Having good control of cash flow.
- Evaluating each and every option on the basis of accounting and tax perspective along with the financial effects of present and future.
Without having a clear understanding of the financial implications of the major decisions, it’s difficult to determine the true cost of ownership for each option and make an informed decision that considers how a purchase will affect the bottom line today and in the future. This lack of knowledge, which many employees may be unaware of, impedes understanding of how today’s decisions affect the future health of a business.
Reporting on Business Operations
Every company is required to submit reports on its operations. Shareholders want regular updates on the return and security of their investments. State and local governments require reports in order to collect sales taxes. Other types of reports, with key performance indicators that measure the activities of different parts of their businesses, are required by business managers.
It is not possible to produce the various types of reports required by all of these different entities without a comprehensive financial management system.
How corporate finance practical training can benefit a business
A corporate finance course enables the stakeholders to develop financial perspectives through learning about necessary financial processes and activities. This helps them grow insights about the potential loss or gain in the future from the decisions made today. As all the activities and decisions in a business start following financial logic, fundamentals automatically improve with higher investors’ and lenders’ confidence.
What topics generally make up a corporate finance practical training program
Corporate finance practical training covers a number of key topics including
- GST modules – Registration, Returns, Advance Ruling, Payment, Refund and other topics along with new functionalities.
- Direct taxes and indirect taxes. Differences between income tax and GST
- Accounting and finance training, as well as how it affects decision-making at every level.
- TDS under GST. Limit of GST TDS. Where TDS is not applicable.
- Payroll processing and labour law compliance.
- Trial balance, balance sheet, profit & loss account
- Cloud-based accounting
- Tally ERP9 – Basics and advanced level
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Takeaway
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