Finance for Directors & Trustees

Understanding Finance in the Boardroom

In the UK Trustees and Directors both have legal duties, including a financial duty. This financial duty relates to the accounts, and also to the organisation’s financial success. In corporate insolvency there are circumstances when the Directors are required to contribute to the shortfall faced by the creditors.

In the light of this legal duty, it is imperative that all Directors and Trustees understand the accounts, and the financial issues facing their organisation. They must all be able to contribute meaningfully to financial discussions within the Boardroom, and not simply leave all the financial matters to the Finance Director.

This practical and pragmatic one day course gives Directors and Trustees the skills they need to fulfil their duty, and to feel comfortable with financial matters. It doesn’t require any pre-existing financial knowledge: it starts with a simple production exercise that builds up to a set of accounts and also illustrates many of the financial issues facing a business.

For whom
The course is for all Directors and Trustees (current or prospective) who don’t feel comfortable with financial issues.

It’s also for anyone who wants to understand the financial issues facing their organisation at a strategic level.

Aims and objectives
This is a high practical workshop. It aims to help participants read and interpret the accounts, and formulate a strategy for financial success.

Specifically, participants will become familiar with the contents and jargon of the accounts. They will be able to interpret the accounts, build a profit forecast, and perform a sensitivity analysis of that forecast. They will have a toolbox of strategies to achieve the forecast. Finally, participants will be able to describe the interaction of working capital and cash flow, and build a cash flow forecast.

The course divides into 5 interlinking sections.

1. The Director’s and Trustee’s legal duties
This section looks at the legal duties facing UK Directors and Trustees
• what have you signed up for
• the financial duties

2. Setting the context
This section uses a simple production exercise to set the scene for the rest of the workshop
• production exercise
• accounting for profit
• accounting for cash flow
• closing the loop: reconciling profit and cash flow

3. The accounts
Here we build up the accounts from the production exercise
• the Profit & Loss account and its jargon
• the Balance Sheet and its jargon
• closing the loop: the Cash flow Statement
• case study: analysing the Profit & Loss account

4. The profit forecast
In this section we build up a profit forecast; perform a sensitivity analysis; and identify some practical strategies that affect profitability
• the profit forecast
• sensitivity analysis
• managing staff costs
• making cuts? Managing priorities
• pricing the product
• the product mix

5. Working capital and cash flow
Cash flow is often the least understood element of business finance in the UK, yet cash flow problems are the most common cause of insolvency
• the cash flow cycle
• managing working capital…
• … and sabotaging working capital!
• the cash flow forecast