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What comes up for you when you hear the words ‘profit and loss statement’ or ‘balance sheet’? Fear, anxiety, stress, or even anger are common answers to that question. Although there tends to be an aversion to wanting to understand financial systems, there are a number of intuitive financial concepts we use in our daily experience. But the language around them can confuse and intimidate the public, creating barriers leading to problems later on.
This episode imagines what may change if universal financial literacy becomes the norm. It explores what is necessary to develop the necessary expertise to successfully navigate financial systems without dedicating oneself to in-depth study. Next, a distinction is made between compliance and management accounting and their corresponding timelines.
Understanding tracking and reporting is a cornerstone of financial systems theory. Tuning in, you’ll learn the implications of leaving out this important step and what you need to know in order to interpret the numbers. We consider the impact of developing universal literacy across an organization and discuss how operating projection can be a powerful tool. In closing, your hosts discuss what we may learn when we create a more holistic and inclusive dashboard beyond cash value. Listen in to hear more today!
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Key Points From This Episode:
• Public attitudes towards learning financial systems. [0:02:07]
• Developing the necessary expertise to successfully navigate financial systems. [0:07:20]
• Delineating between uses for accounting systems: compliance and management. [0:11:15]
• Corresponding time frames for management accounting. [0:16:40]
• Reporting and tracking expenses and income. [0:20:55]
• Developing universal literacy across an organization. [0:25:20]
• How operating projection can be used as a tool. [0:31:31]
• Creating a more holistic dashboard. [0:43:07]
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Tweetables:
“Having universal literacy of financial systems across the organization is empowering and liberating and enables a distribution of power.” — @kevinbayuk [0:07:45]
“Cash flow management is really important in universal literacy to have some system for looking at the next period; it could be a week, it could be a month, and say, ‘How much cash do we have now, how much is coming in, and how much is going out?’” — @kevinbayuk [0:27:28]
“When a decision is made collectively, it lands differently than when it comes from a boss or a hierarchical non-transparent way.” — @kevinbayuk [0:29:18]
“Whatever initiatives you have in the company that are [impactful], you can go deeper once you have some level of reliable stability and an operating projection helps you get there.” — @kevinbayuk [0:37:50]
“Not everyone needs to be an expert, but there’s some risk in abdication, or to ignore, or to avoid financial systems altogether.” — @kevinbayuk [0:47:13]
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Links Mentioned in Today’s Episode:
Kevin Bayuk on Twitter: https://twitter.com/kevinbayuk
Kevin Bayuk on LinkedIn: https://www.linkedin.com/in/kevinbayuk/
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Show Notes + Other Links
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