While there are a ton of skills and terms to know in order to succeed in the financial side of the business, this article will highlight those that are most important so you have an idea of what you need to master and what you will be doing if you pursue a career in the finance department of any business.

Even if you find yourself in another managerial position, understanding the financial side of business will open up a lot of opportunities for you and help you do a better job.

Here are the top skills you need to master:

Cash flow management

A business needs a steady cash flow to keep up its operations. In addition, cash flow needs to be managed to account for any new products or projects that need extra at specific times. Suppliers and employees must be paid on time. Cash flow must be managed so that checks can go out for payroll on a specific day while ensuring there is enough cash in that specific account to pay for this expense. 

Cash is split between many accounts at businesses, so it is easier to make sure there are sufficient funds to cover the expenses that are paid from that account.

A financial manager at a business is in charge of checking balances and ensuring that transfers of money occur as needed. At some companies, this is automated to a large degree, but it is still up to a live person to make sure that what is supposed to happen actually does. This also makes it possible for discrepancies to be spotted early on. If an expense is greater than usual, additional funds may need to be transferred and made note of. Some companies may have an account set up with additional funds that can be used when there are shortfalls in some area or there is an unexpected expense that must be paid promptly.

Risk assessment

Balancing risk and making smart business decisions is one of the many goals of those with an MBA, particularly those who are specializing in the financial side of business. Data analysis is often used when there are big decisions to be made. Data mining can help evaluate risk because it makes use of a massive amount of data to discover specific trends and can be used to answer questions that can help reduce the risk associated with a business decision. For example, if data analysis shows that market trends are likely going to be unfavorable for a specific product, then a company can rethink investing any time or money into developing that specific product until conditions improve. Helping eliminate risks can prevent revenue loss and allow time to develop products and services that are more likely to succeed.

Making smart investments

Paying attention to the markets and the economic conditions is important when it comes to making good investment decisions. Collaborating and managing a portfolio of investments for any company is a major responsibility. Luckily, there are a lot of tools and analyses that can be used to make smarter decisions. This does not mean that one can entirely rely on these methods. Paying attention to popular culture, politics, general economics and public opinion is smart because it can help inform you whether something is smart to invest in or if you need to at the very least do more research.

Budgeting

Creating a budget for a business requires a lot of attention to detail. There are also many smaller budgeting tasks that you need to take on. Each project requires a budget and although there may be other employees that play a major role in developing budgets, the chief financial officer ultimately has a major say in whether a budget is reasonable or not. 

Budgets need to be incredibly detailed especially if the budget is for a major investment. It is better to create a budget that is a little larger than needed to account for unforeseen costs. Even the most well-planned projects can run over budget. Supply chain issues are a perfect example of something that can make a huge difference in the cost of manufacturing a product. If you find that a supplier cannot deliver what you need in the next quarter and you are forced to use an alternative supplier, there may be a significant cost difference that must be accounted for. Many companies avoid raising costs for as long as they can, especially during times of already high inflation.

Financial reporting

Reports are critical to monitoring the financial health of your company. This means that you need to have a great reporting system in place and a way to easily pull specific reports on demand. Reports help with analysis in all areas and are key to making good business decisions. 

Quarterly reports are often used to signify the overall success of the company. Of course, yearly reports are what ultimately decide how well a company performs, but quarterly reports can let business leaders know if there are trends they need to watch out for and if they need to make more conservative decisions or if things are going extremely well and there is room for growth. 

Comparing quarterly reports from the quarter of the previous year is also important. Some businesses will have quarterly earnings that follow an annual trend. For example, if your company makes winter sports gear that is mostly sold in the United States then you are not going to see the highest profits during the warmer months. However, if your earnings are severely off from the year before then you need to ask why and see what can be done to alleviate the problem.

Taxes

Tax laws and calculations are not easy for most people to understand. In the business world, it is very important to make sure that a company is up to date on tax payments and that taxes are being calculated correctly. Keeping impeccable financial records will help ensure that your business is not subject to any surprise visits or calls from the IRS or law enforcement. 

Businesses of all sizes must know what tax credits they are eligible for and what they can do to lower their tax bracket. There are perfectly legal and ethical methods that can help businesses save money on taxes, but it takes a skilled financial professional to know and apply the knowledge before taxes are filed. Consulting with business tax specialists is common and can pay off year over year.

Knowing the basics

While the major tasks discussed in this article are critical to business, you cannot be good at them without first knowing the basics. Here are some of the more basic skills you need to hone so you can do a better job with the important tasks you are given:

Know the correct financial terms and lingo

You must speak the language of finance fluently. Using correct terminology when addressing others or completing reports is critical.

Assets are grouped into two categories. Current assets are those that will be beneficial within the current year while other assets are considered long-term assets. This is an important distinction because it can determine if you have enough cash flow to meet short-term goals or if you need to pull funds from long-term assets to achieve goals.

Liabilities are also divided into short and long-term. A short-term liability is something that a company must pay entirely within the year whereas a long-term liability might take many years to pay off. A larger loan would be an example of a long-term liability.

Income vs. expenses

Gross income is what a company brings in, while net income is the profit after all expenses are accounted for. It is important to calculate total expenses correctly since it is the factor that determines just how much net profit your company can claim for the quarter or year.

Maintaining accurate expenses is something a good financial team should take seriously. Overlooking expenses too often leads to a skewed picture of the health of the company. While the occasional mistake or oversight is to be expected in doing business, consistent misrepresentation of expenses can lead to serious consequences with tax liabilities. 

Earning an MBA can help you achieve success in modern business

Many people who graduate with a bachelor’s degree in a specific field go back to school to earn their Master of Business Administration (MBA). An MBA is a valuable degree to hold no matter what industry you work in. This managerial level degree is the standard for working in any business leadership role.

Working professionals may be interested in pursuing an accredited online MBA program through a reputable institution such as St. Bonaventure University. This is a great way for you to earn your MBA while continuing to work for a business. You benefit from your past and current experience while the business you work for can benefit from your increasing level of skills and knowledge. In as little as 20 months, you can earn your degree. St. Bonaventure even offers a financial specialization for those who want to work in the financial side of the business or who at least want to have advanced financial skills to help take their company to the top.

Other key financial management skills

Financial skills involve more than just being good with numbers. Here are some of the other skills that good financial managers have and use regularly:

Open and consistent communication with management teams 

It is important to keep others well informed and to not be afraid to bring up a matter of importance. Keeping key players up to date on the financial side of the business is important. 

Answering questions and clarifying anything confusing clearly and concisely is critical to preventing misunderstandings and mistakes.

Task delegation

The financial side of a business rarely involves just a single person. A good financial manager at any business needs to be skilled at delegating tasks to others. This means being able to pick up on the strengths and weaknesses of others and use the abilities of team members to their utmost potential.

Task delegation is important because it prevents a single person from taking on too much. Spreading the work around allows a company to utilize a lot of expertise and encourages innovation and hard work.

The ability to work well under pressure

All businesses have times when it feels like there is a lot of pressure. As a financial expert, you will have times when you are being pressed for answers or asked to find a solution that may not result in the answer that others want to hear.

Keeping calm and meeting challenges head-on is a necessary and highly valued skill in the business world. By setting a good example, you can teach others to keep cool under pressure. This is best for the company because getting too worked up rarely helps and can be quite detrimental to the success of a business in the long term.

Conclusion

Good financial management skills are valuable to anyone who wants a long-term career in any business. With more businesses starting up than ever before, there is a strong demand for business leaders who can help out with business finances.

Now is a great time to earn your MBA and get the skills you need to excel in the businesses of today.

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