Not exactly groundbreaking material: Business is, well, business. Whether for profit or nonprofit, every organization in the world has customers, vendors, etc. It is a common thread across the sectors of our economy. Sure, with manufacturing, we look at cost concepts such as direct materials, direct labor, and manufacturing overhead. Finished goods and work in process. With nonprofits, we look at fundraising dollars and program costs. Regardless, decisions involve choosing between alternatives. The goal of making decisions is to identify those costs that are either relevant or irrelevant to the decision.
When it comes to accounting, there are two areas: (1) Financial accounting and (2) managerial accounting. Financial accounting is concerned with reporting financial information to external parties, such as stockholders, creditors, and regulators. Managerial accounting, on the other hand, is concerned with providing information to managers within an organization so that they can formulate plans, control operations, and make informed business decisions.
What sets a business apart is its value proposition. Have you considered what the value chain looks like at your business? A value chain is simply a set of activities that an organization carries out to create value for its customers. At its core and overlapping is the role the financial arm of your organization helping the other units make informed business decisions. The finance arm is critical to the long-term health and sustainability of every organization. Your financial “house” needs to be in order.
During my career, I have engaged in both financial and managerial capacities with for profit and nonprofit organizations. From budget and fiscal responsibilities to financial auditor to engaging with manufacturing and distribution clients with their inventory cycle counts to helping healthcare, professional services, and retail businesses, I enjoy all aspects of the financial function. There is just something about designing reports and providing information to help organizations with their financial decisions from inventory levels to the impact of programs. To hear the excitement of a client share that a newly created report now ran in a matter of minutes has saved her two days from a former, cumbersome manual process is rewarding. What I have found is organizations that (1) have their financial “house” in order and (2) identify and execute on their value proposition succeed. What value-add are you providing?