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How do you promote financial literacy?

The responsibility of CFOs, FDs and accountants to improve financial literacy

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I've been writing for AccountingWEB for a couple of months - thanks for having me! I'm interested in learning about CFOs, FDs and accountants' role in improving financial literacy. This could be aimed at the management team, sales people or the wider business.

  • Do you have an obligation to help team members?
  • Are there any techniques you use to better explain financial metrics and motive staff to pay attention to them?
  • Are you involved in implementing courses? eg. finance for non-financial managers

It would be great to get some feedback about how important an issue you think this is and any steps you've taken.



Replies (9)

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By johngroganjga
12th Apr 2018 11:08

Your question only applies to accountants who work in industry, and most on here are in practice, although by no means all.

All I will add is that the ability to make technical subjects intelligible to the lay person is one of the key professional skills of the accountant, wherever they ply their trade, but only in industry does the question of having a general mission to educate the uninitiated arise.

Thanks (1)
Replying to johngroganjga:
Chris Goodfellow
By Chris Goodfellow
23rd Apr 2018 09:35

Sorry for the slow response. I forgot this account is tied to my old Sift address and wasn't getting the alerts (I'm freelance now).

Thanks for the succinct breakdown of the responsibilities of the two roles. It makes a lot of sense.

I'm fascinated by the Feynman Technique. It provides a great model for conveying complex information using simple language. It's an incredibly useful skill.



Thanks (0)
Hallerud at Easter
12th Apr 2018 11:26

One key skill is recognising when the eyes of the Muggles are glazing over and one is approaching system shutdown, this is to my view the most important skill.

When is this point, no set answer, best approach is to observe the listeners and modify presentation depending upon reactions, though easier for me as I only report / communicate to the two owners/directors, with larger groups not sure how practical this would be.

With my two directors I have gradually introduced new concepts to them over the years (20 now), so gearing followed by say interest cover then repayment cover, gross yields, net yields etc, etc, etc, with my pet mantra (re what we do) that cashflow trumps profit.

The other key skill is highlighting the key bits out of the whole, also hammering certain bits over and over to reinforce messages- my greatest achievement re this was convincing them that holding cash reserves was not wasteful but sensible though I expect the 2007/2008 economic/banking reverses helped sell that particular message.

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By mrme89
12th Apr 2018 11:44

Make things relevant. Don't give staff KPI's to achieve without explaining what they mean, why they are important, and how their job affects the KPI.

Non-finance bods can quite easily ignore certain targets if they don't understand what they mean. They may be hitting budget, but if they don't understand what they mean, they can't improve anything. The following year, they get a similar budget on that line. As a result, budgets are hit again, but the business could be doing better in certain areas.

Thanks (1)
Replying to mrme89:
Chris Goodfellow
By Chris Goodfellow
23rd Apr 2018 09:47

Thanks, mrme89.

Explaining why KPIs are important and how individual staff members' actions impact them is absolutely crucial. It was raised by everyone I've spoken to so far. I think there's also a point about moral here. It's very difficult to be motivated if staff members are told to impact a KPI that seems like an abstract concept!

Thanks (0)
By andy.partridge
12th Apr 2018 12:56

1. No serious subject should begin 'Hey' unless your target audience is of school age.
2. No need to thank me for having you. I've never had you.
3. Because of 1 and 2 I was put off reading further. Sorry.

Thanks (5)
Replying to andy.partridge:
Chris Goodfellow
By Chris Goodfellow
23rd Apr 2018 09:53

No need to apologise, Andy.

Thanks (0)
By adf2410
12th Apr 2018 13:47

I work as an interim FD in the charity/public sector, and a lot of problems arise if non-financial people who are responsible for budgets don't understand their numbers (which happens a lot).

My ways of dealing with it are:

Monthly/quarterly budget holder meetings - explain their year to date numbers and help them to forecast.

Not a recommendation for a private business, but in the charity/public sector - presenting the monthly management accounts to as wide a group of people as possible (not necessarily all at the same time). RAG rating variances, flash cards at the front of the management accounts etc. all make them more understandable/readable to non-financial people.

Finance for non-financial managers training - specific to the organisation, give context (amazing how many people working for an organisation don't know the turnover or what the biggest costs are), difference between capital and revenue spend (why can't we have a pay rise when the organisation can afford to spend millions on a new building?). I find that the most effective way of helping people to understand is to liken each concept to their own personal bank account / wealth / debt etc.

Helping them to make sensible financial decisions - my door is always open if they want to talk a range of options through with me.

Explaining why various controls are in place - finance teams are generally seen as a block to getting on with the day to day business, but if people understand why controls have to be in place (e.g. centralised purchase ordering), then they're more likely to engage with them.

Actively seeking feedback and acting on it - tiny tweaks to reports or processes can help the finance / non-finance relationship hugely.

Thanks (4)
Replying to adf2410:
Chris Goodfellow
By Chris Goodfellow
23rd Apr 2018 10:05

Thanks for the comprehensive response. It's really helpful to see how you're building up a programme of support.

Is there anything you've changed that's helped encourage people to attend the monthly management account meetings?

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