One of the things that amazes me is that many people in business don’t really understand the “ins and outs” of a profit and loss or balance sheet. And that is before we get to issues surrounding cashflow.
I’ve had some interesting meetings with people over the past week where it has become apparent that there is a significant lack of understanding of basic financial concepts. Please be aware that I am not necessarily saying this is a bad thing – it’s more of an opportunity.
Where business people don’t appreciate the information that we provide to them, it is incumbent on us as accountants and advisors to help them to learn and provide them with a financial education. I know of one accounting firm in the UK which provides an education process for their customers (and others) where they teach the basics of reading financial reports. I believe there is a terrific opportunity for us accountants to provide this sort of service to business people – it will really assist them in making better business decisions.
A year or so ago I presented to a business group in Ballarat on the topic of business margins and mark-ups. Many of the attendees did not understand the difference in the two and certainly did not appreciate the impact of discounts. The feedback I received after this presentation was terrific.
As a consequence of this, and following from our strategic planning work, we’ve now appointed a firm to assist us in putting together some video presentations which we’ll post on youtube. These will discuss the topics that business people need to know in simple and understandable ways which will help anyone wanting to develop their understanding of basic financial reporting. In some ways it will be a community service – if we assist a number of business owners to make better business decisions then that will be a terrific outcome.
I’ll let you know when the posts are available on youtube – hopefully you will get something from them and I would appreciate any feedback you wish to give on the topics as presented.