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Skip to 0 minutes and 4 seconds A business has demands placed on it from a variety of sources. Lots of managers and external stakeholders want information, and they usually want that information quickly before it becomes out of date. To keep the business on track someone has to be responsible for providing that information. Most organisations have a finance team. And in large established businesses, this team can often be a big one. The team will typically have a broad remit. Its responsibilities will include, one, overseeing that financial transactions are being recorded appropriately; two, managing the organisation’s cash, sources of finance, and investments; three, coordinating the organisation’s planning or budgeting process; four, providing accounting information for monitoring business performance.

Skip to 0 minutes and 58 seconds They will also provide financial information to support decision making on projects. Five, finally, they will produce the financial accounting information, which is reported to external stakeholders. Each one of these activities consists of a collection of responsibilities, and tasks that underpins it. So you can appreciate the breadth of finance roles that exist in established organisations. It can be as simple as, do you decide to sell more into a particular channel because it’s more profitable, because your financial information shows you make much more profit selling into one channel, and you might even be making losses selling into another channel. And unless you have that financial information you might think, oh, I’m selling so well, but actually losing every time you sell.

Skip to 1 minute and 42 seconds On the other hand, you could be selling very little, but making huge profits from those sales. So you can make simple decisions, if you want to sell more, and be more profitable, and how to stop those losses where I’m selling lots, but losing money every time I sell. Those are two extreme examples. But unless you have that financial information on a regular basis that allows you– you can’t make that decision. Across all its responsibilities, data is at the heart of what the finance team does. Businesses will use an information system to record transactions, called a transaction processing system, and a management information system to summarise the data to help with reporting to managers and to external stakeholders.

Skip to 2 minutes and 23 seconds We live on data. And finance is no different from anywhere else. The more data we have about how various parts of the clinical service unit, for instance, are working with all the responsibilities that they’ve got actually impacts on our performance and our performance measures. So we’ve got to have lots and lots of really finite financial information to work on. So it’s not just about doing your bit and churning out the figures. It’s about how that information is used, what the impact is on the organisation, and then seeing the results of it. A huge thing now is data, how the business is going to use it, and that applies to financial data as much as anything else.

Skip to 3 minutes and 5 seconds For me, the future is around finance business partners, not just people who are just doing a task within a finance team. IT is an absolute integral part of our job. In fact if we didn’t have IT available to us, I don’t think we’d be able to do our job in the way we do it today. One of the most interesting aspects of working in finance is understanding the data, interpreting it, and making it tell a meaningful story. It is never plain sailing running a business, even a successful one with an established track record. You need to be agile in coping with the unexpected. Managing change well is an important attribute of successful business people.

Skip to 3 minutes and 48 seconds A flexible attitude to your work if you work in business is essential.

The finance team and financial data

In this video Alice gives an overview of the role of the finance team in an established business, and a range of business people explain the importance of financial information within their organisations.

As Alice outlines, an organisation’s finance team will have a range of responsibilities. These will typically include:

  • ensuring financial transactions are recorded appropriately;
  • managing the organisation’s cash, sources of finance and investments;
  • coordinating planning and producing budgets;
  • providing accounting information for monitoring business performance;
  • providing financial information to support decision-making on projects;
  • producing the financial accounting information which is reported to external stakeholders.

What’s next?

In the next step of the course we will explore in more detail each of the activities Alice has described.

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This video is from the free online course:

The Importance of Money in Business

University of Leeds