I don't get finance people

[NaanPeshwari]

I have to work with finance people and I really don't understand them.

We have budgets that have to be managed and god help me I hate it. They have different ways of doing things. I'm not dyslexic but there my be some kind of discalculia as if you talk to me about numbers I don't get it. Numbers aren't a language to me, they are, I don't know shapes on a page. So I can work with them if they are written down. But finance people talk too fast in these meetings. I've asked them to slow down but they do it again. What do I do?

Don't know about you @NaanPeshwari but my brain is a bit sore. I do understand some of this when talking to (nice, so nice!) FinancePeople, but then it just floats away.

I'm given a (large) budget. I'm told not to overspend or underspend. I track it forensically (with VAT, percentage increases, other contextual notes) across the year, and can report on budget vs spend at any point in time.

But when FinancePeople send me a budget report it bears no relation to mine and I feel judged!

It really is BudgetPeople v AccountingPeople. It's the translation piece that's missing.

The first problem there is that all data should be coming from one system! A lot of organisations really struggle with this concept.

The second problem is that, in most cases, you should always be thinking of amounts without VAT. (unless you are actually controlling pounds money in and out of the organisation)

In practice most organisations run on series of "shadow" data kept in Excel, often with mistakes in formulas.

I'm going to challenge this @RedRosie . So what do you do to understand the gaps? You sound senior, in any other area of your job would you get away with wailing "I just don't understand! ". You need to bridge the gap or find someone on your team who can fill this gap for you. You need to ask the questions until you find someone who helps. You need to update your reporting so you can tie it to the finance numbers. You need to have a regular monthly meeting ahead of the reporting being issued to tie it together. Because the way you're tracking it is not how the company tracks it.

I hear you @BloomingGardens ... Fair point. I think there are issues on both sides as I'm not generally hard-of-understanding professionally, and they genuinely are very nice people. We do meet monthly and discuss budgets, but I often don't understand what they are are saying and they don't understand why I don't understand. It's like speaking different languages which is, potentially, what it is!

I should own it as I'm senior to them (although they are experts in role). Perhaps if I talk to their manager I can find a way forward, or they will have some suggestions as to bridging the gap in understanding.

I fall into this group too. I scrutinise everything to the pence level, I can account for everything that comes in and out. I hold my project teams just as accountable for the money as the deadlines.

Do I understand the wizardry of spent but not spent? This is an asset? Or when cash flow or capital spend is a priority? Only if I squint hard.

On the upside I’m an excel wizard and can do waterfall charts 🤣

Most people in finance will have spent years training / quals etc - and they will have found it all a struggle at the start - so don't worry about asking questions.

Often, however, we are stuck measuring things one way - because that is how the systems are built - but then people want the data another way.

Consider for example systems that might track sales by customer, and then someone decides instead what we should be doing is sales by product.

A bit simplistic, but sometimes the questions we get asked cannot be answered with the way the company decided (maybe years ago) how it wanted all it's transactions recorded. This then leads to frustrations on all sides, but, on the whole, finance systems only get changed every 5-10 years, so there is not much scope to change the whole reporting.

Definitely. They have a responsibility to be good at explaining it to you! But you might need to be the one pushing it to happen unfortunately.

Hi!
If you underspend on a budget item, and you have evidence / it's clear it won't happen again, then you just assign that expected spend elsewhere.

This is really helpful.

Do you get provided with the actual spend against your budget items in real time? You should have been given a template to use by finance.

There's a monthly meet. Finance have a log of transactions. They ask questions to check they have it all. Delivery find it quite confusing so that takes up most of the time.

At the end of cycle, either 6 or 12 months we complete a template. So it's hard to see where we are. I did ask but told not an expectation is it.

Why is it revenue attributed to June?

Why isn't it revenue attributed to the month it was ... revenued?

For tax purposes it goes on the year you get the cash, not the year did the work?

Once you get beyond self employed window cleaner etc accounts, taxable revenue is very much based on accruals and prepayments, rather than cash receipts. The framework is governed by accounting standards first, which may then be modified slightly to get to taxable income.

Not quite sure about "assigning it elsewhere".

I mean if department A is up on stationery and department B is down, you could move it I suppose - but not if electricity is up and hotels are down. That would be, if not fraud, misrepresentation.

The issue definitely seems to be in connecting two worlds. In my current role there was a huge gap in understanding between finance and marketing. Marketing couldn’t understand how we’d be talking about different figures all of the time - they’d think that they had hit budget and they’d actually be miles off.

What has worked for us is:

1. I added a whole “translation” section to a monthly team update to explain why the two worlds are different - in very basic language and going back to basics ie explaining what VAT is and that it is never “ours”
2. I also now translate every accounting number for revenue in to the marketing equivalent - they ignore returns and include VAT for example hence why they’d think they had hit the budget number but actually fell short. Whilst it’s more work for finance it was exhausting having the same discussions all the time and at some point someone needs to take ownership to ensure we’re all on the same page.

Would anything like the above work in your company? Ultimately finance need to realise it’s in their interest for their budget holders to feel confident with the numbers.

I work in finance, and often have to explain finance concepts to people who have never had responsibility for money in a business context before. I find it helps a lot to start with this explanation:

In the olden days of the patriarchy women stayed at home and managed household finances. Men went to work in the city and managed business finances.

You couldn't possibly have the two things being thought of as in any way the same thing so business finance has lots of complicated words and terms, but is still, essentially, just like managing your own finances with fancier words. If you can manage your money at home, you can manage business money at work. If you can understand what is happening with your own money, you can understand what is happening with business money.

"prepayment" sounds scary and finance-y but literally everyone understands the concept of paying a deposit on a wedding venue but not using the venue until the date.

"accrual" sounds super important and complicated and difficult but everyone understands that if you've had your windows replaced in June and someone asks "did you spend a lot of money in June?" the answer is yes whether or not you've had the bill in yet.

I work in private wealth dealing with trusts and have no fucking clue what anyone is talking about. Constantly winging it

Nice try, Rachel 🤣🤣🤣

@topcat2014 it's not fraud or misrepresentation to flex your budget to keep in line with business goals. No one can see into the future. They can make a best guess.

When I say a template, I mean the accounts system will have a capability for finance to populate with your numbers, then as transactions happen, the actuals go against your estimated figures, as they should be coded properly when they make it onto the accounts system.

So finance should provide you with a template which is blank and downloaded from accounts system. Then you won't get confused with what is where. You all all using the same layout.

Ask for last year's budget vs actual and go from there when updating.

😂😂😂 rumbled.

Yeah that's kind of what happens. I'm just going to be firmer in getting it done quarterly if not monthly. And also ask delivery to share their records before hand.

Thank you this thread has been an eye opener.

I am a "finance person" and many accountants are chronically lacking in people skills

Of course its not fraud to flex budgets in fact it many instances it would be stupid not to. If you run two hotels and one have over spent on electricity and the other has underspent it would be far more sensible to spend the underspend than it would be to let the other hotels guest have to sit in the dark.

I may have misunderstood the point. I was talking about coding one type of expense against another category that had spare budget and hence altering the actual accounts of the business.

Budgets are essentially a work of fiction, but bear in mind some organisations (eg in public sector) would require board approval to amend category totals. SME are more flexible within an envelope

Agree, and also a lot are not good at understanding the business and dealing with ambiguity. I love understanding the context of things and solving tricky problems, so I positively love working with people on these things and seeing people have their aha moments. But I've worked with accountants who are very rigid and procedures based and can't adapt or change.

Hmm. I see this both ways. I am finance, and appreciate that finance in itself attracts lots of people who are quirky and have poor communication skills.

I myslef try very very hard to explain things to people, on their level, and ask make a point to check that they really have understood.

However, there are many many people that despite my efforts, just don't get it, don't get basics. So I need to work around, and adjust for that. But if they tell me that they don't even want to understand, what exactly do you expect me to do?

@user0345437398.
That post is classic, but shows a lack of understanding. In business we must make sure things are posted in the correct month. It's all about timings.

As a previous poster explained, management accounts are all about producing accounts for the month.

You did the work that month. In September. But you haven't billed the client yet, in September. But you did so the work, in September. So the sales invoice really needs to be attributed to, posted to September. That's what accounts will make happen.

Likewise on the other side of things: one of your suppliers did some work for you in September. They haven't yet billed you yet though. Haven't sent you their September invoice. But it's now October. So accounts knowing you actually did have a cost in September, that relates to September, will put through a journal, a provision, to post that cost of say £3k to September. For the building work your supplier did actually do for you in September. But they (supplier) haven't yet sent their invoice, to you.

so when the invoice does actually come in, in October, it's posted, processed and paid. It might well be paid in October. Or even in November, in the next bacs run.

but when it was paid, it's kind of immaterial. It's not actually relevant very much. (I mean it matters to the accounts people cause it matters to their cash flow. Ie when It comes out of the bank)

but in the management accounts it doesn't actually matter when it was actually paid.

because the fact is, if you remember, it was posted in September. which is the rightful place for it to be , because that's when the person actually did the work for you. and that's why the cost needs to be posted in September, as it was, because accounts made that happen.

Does that help?