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How to learn finance: A guide for non-finance managers

2 January 2021

Senior managers and CEOs must understand every part of a business, including the unique challenges, opportunities, and workings of each department. But no area of knowledge is more important than finance. A robust budget and strong financial planning are fundamental to business success.

“To reach top management levels in large companies, some background in finance is vital,” explains SCU Online finance lecturer Jennifer Harrison. “CEOs need to understand the language of finance so they can communicate effectively with the board of directors, shareholders and analysts.”

Not only that, but managers at all levels need to know the drivers of firm value, Harrison says, so they can create and manage real, sustainable value for the business, rather than pursue growth at any cost. And it’s as important in small and medium businesses as it is in large.

“Obviously, knowing how to better make investment and financing decisions can only help those owning and managing small businesses,” Harrison says.

Having an in-depth understanding of business finance raises the bar and places you in a powerful leadership position.

Finance skills for non-finance managers

These days we hear a great deal about the essential nature of soft skills for leaders in order to motivate, connect on an emotional level, get along with all types of stakeholders and inspire confidence in specific strategies in order to hit pre-defined goals. But hard skills are just as important for successful business management. This includes technical abilities in the particular area of the organisation itself and, more importantly, financial acumen.

It is vital to get a rapid understanding and command of a situation where finances can fluctuate dramatically. With a rapidly changing global pandemic influencing the economy, a firm understanding of finance by non-finance managers is essential.

For those working their way up through an organisation via other departments, financial knowledge can be difficult to come by outside of simple processes such as reading a budget and handling invoices.

Finance is explored from numerous angles in the SCU Online MBA program, in order to give graduates a full and rounded knowledge of the vital area of business management.

Thankfully, one of the most powerful benefits of an MBA is the deep and tangible finance knowledge it offers, always backed up by case studies and projects that help to give the learning a high level of real-world purpose.

Finance for non-finance managers is explored in the SCU Online MBA program from numerous angles to give graduates a full and rounded knowledge of the vital area of business management. This level of training and support will give you the ability to work your way around the spreadsheets and spot areas of concern as well as those areas with a stronger performance. By having these abilities, you will be able to appraise the financial risk to your business and implement strategies to recover your position. The skills you gain will enable you to challenge those areas of concern or risks that may impact your business strategy.

Here are some of the key aspects of the Finance For Managers unit in our online MBA course:


How to learn finance

Time value of money

Even in a zero-growth environment, all money is worth more now than the same sum will be in the future because of its earning capacity. Understanding this concept enables you to make robust business decisions on how your income and profit are used.

The time value of money (TVM) will vary for different businesses and in different industries, but in terms of investment, interest rates, valuation, capital expenditure and cash flow, TVMis a core consideration for every company. Having that in-depth knowledge of how finance works in the business world helps you decide how spending will further strengthen your assets.

Going beyond a simple cash flow spreadsheet places you in a powerful position when running a business or dealing with a challenging situation. By taking time to invest in yourself with an MBA course, you will acquire adequate finance skills as a non-finance manager.

Bond markets and interest rates

In the bond market, new debt is issued and debt securities are traded. For organisations, the bond market can be a vital source of funding and investment. Along with banks (and including the government bond market), it is one of the two major components of the credit market.

An understanding of the bond market helps solidify a broader working knowledge of financial markets. Changes in interest rates, which in turn are affected by a nation’s monetary policy, can directly affect the value of bonds. The bond market, therefore, is an important economic indicator for business leaders.

Risk, return and diversification

Without a strong practical and theoretical knowledge of finance, the delicate balance of risk and return is reduced to guesswork. That guesswork is removed by financial mathematics, risk analysis, revenue projections and more, giving a management team the data they require to make an informed decision around optimal levels of risk and return.

These figures also help the business recognise the unique benefits and drawbacks of diversification, and to figure out the exact levels of diversification required to minimise risk and maximise return. Once you have a firm grip on in-depth financial details, you will be able to make sound business decisions that make a difference to your company. The finance knowledge you gain will help build powerful and robust business plans to drive your company forward with innovative plans.

Capital budgeting

Capital budgeting

Capital investment is often an essential part of business growth, but how does one figure out the optimal levels of investment to ensure, and maximise, return? In the Capital Investment Analysis segment of the Finance For Managers unit, SCU Online MBA candidates learn about the decision criteria, including cash flow estimation and the risk and cost of capital. Having this knowledge helps you use your profit in the most tax-efficient way and enables sound business decisions.

Of course, appropriate capital budgeting techniques are taught, meaning SCU Online MBA graduates not only have the tools with which to evaluate capital investments, but also the expertise to use those tools in any business environment.

Alternative company capital structures

Every business has choices of capital structures and distribution policies, or payout policies. The capital structure is the method, system or shape of the financing of the entire business operation, and therefore is also a catalyst for growth.

In the Finance For Managers unit, SCU Online explores various capital structure options and investigates their application to real-world case studies.

Depending on the size and shape of the business itself, the capital structure can vary from simple investment arrangements to hybrid combinations of equity in various types and levels of stock and debt from banks or the bond market. Of course, capital structure relates to all the previous segments of the unit, tying them together as a whole.

These include:

  • The TVM and the resulting effects of that time value on the business's overall financial performance
  • The way that bond markets and interest rates work and how they influence the business and its market
  • The most appropriate levels of risk for a desired return
  • The most appropriate levels of diversification to further mitigate risk and to empower return
  • The methods and tools to make sound decisions around capital investment

After completing this unit with the SCU Online MBA, you will inherit a broad and valuable understanding of the powers at play in, around and outside the finance function.

Level up your finance acumen

In today's climate, where there is economic uncertainty due to the pandemic, having the ability to analyse and digest complex financial issues is an asset for business leaders. It is particularly important in a fast-moving and changing environment where decisions need to be made quickly.

Perhaps most importantly, finance knowledge gives MBA graduates the confidence to go into conversations armed with the right questions so they can receive the right formation to make properly informed decisions. The knowledge and skills will also strengthen their portfolio. It can make the difference between a good and a flawed financial decision.

Learn finance and other business skills by studying an MBA with SCU Online.