Not many are aware that financial mis-management is responsible for much of business failures the world over. Perhaps as high as nine out of 10 businesses that fail do not fail because they had an inferior product, nor because their marketing was inefficient and also not due to labour problems, but because of bad finance management.
And this happens because of a widely held belief that finance management is the job of the finance department alone.
The truth is that finance management or mis-management happens in every department of an organization. Most decisions taken by various so-called non-finance managers/executives are in fact financial decisions. A decision taken by a sales person, who is offered a large order provided he can cut price, to accept or to refuse the offer, is a financial decision. A decision as to the levels of inventory to be maintained by the stores manager is a financial decision. An HR decision as to the size of the ‘bench’ to be maintained is also a financial decision.
In fact, what happens in the finance department is largely accounting related. Finance management, or lack of it, take place in all the other departments. Every manager is a finance manager.