S4E8. Financial Leadership

Why is it that CFOs so often struggle to be understood?

First, CFOs speak in the foreign language of accounting. If they are not able to translate accounting jargon into English, then the people they work for will not understand the significance of what they are saying. Second, accounting has an image problem for non-accountants. It’s an image full of pages of mind-numbing numbers that make no sense, leading to ‘listener shut-down’ and creating a phenomenon that, in turn, leads to lack of accounting acumen within your organization.

What is the antidote to this mind-numbing issue? Leadership.

The best and most effective leaders have a good working knowledge of the company’s financial health, and their decision-making process is established in the financial truths of the organization. Armed with this accounting acumen, the effective leader can influence decision-making by conveying the tactical connection between the mission statement and the financial statements. 

To have a better understanding of the company’s financial health is to achieve a healthy business acumen. Business acumen is built on a foundation of accounting acumen, plus financial acumen, and every leader should strive for this excellence.

I hear stories all the time from CFO’s about how the sales team needs to grow their business by 25%, and yet, in the process, lose 15% in profits. In my interview with Ken “Mr. Biz” Wentworth, he calls this phenonium ‘the silent killer’ to all businesses. The silent killer of a business is not understanding the fundamentals of accounting and finance. We need this understanding and knowledge to make more informed, smarter, and more profitable decisions. If you understand accounting, you can understand finance. If you understand finance, you can understand your business.

We need to teach accounting and finance to non-financial leaders in a different way. We are not trying to turn them into accountants, but rather into leaders with financial acumen. We want to help them gain access to critical knowledge in a manner that removes the complexity of accounting/financial jargon and teaches in plain English.

When you switch the accounting and financial light bulb on and include it as part of leadership development, your leaders will make better business decisions because their business acumen has been fully achieved.

If you would like to learn more about the Color Accounting process, please contact me at peter@petermargaritis.com.