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How To Learn Basic Finance And Accounting?

How To Learn Basic Finance And Accounting?

In the past, the career path in Finance was relatively clear. You started in accounts receivables, accounts payable, as a billing clerk etc. Do well there and you could start as an accountant doing entries and reconciliations and eventually becoming a senior accountant also doing reporting and some analysis. From senior accountant, you could become a finance manager if showing leadership qualities or a financial analyst in you wanted to specialize in FP&A as an example. Then you might go on to become a finance direction or M&A specialist and so on. There were many roads leading to Rome and which one you eventually chose also came down to personal preferences. Regardless, there was a clear path that first, you needed to learn the basics of what happens in a finance function, then you build experience as you take on more advanced tasks eventually deciding if you want to pursue a leader or a specialist track. Today everything is different and I’ll tell you how before we discuss what that means for your career as a finance professional.

The basics are no longer performed where they used to be

So, what is happening in finance functions across the globe that change the career paths of finance professionals? Multiple things are happening. First, the world got more connected meaning that some work could be performed anywhere by anyone. That opened to labor arbitrage of tasks from high-cost countries to low-cost countries but even outsourcing within countries as companies were forced to focus on their core competencies as part of the Financial Crisis. Second, as transactional tasks (what I refer to as the basics of finance and accounting) were all moved to global shared service centers in low-cost countries, the next step was to move the process ownership. Third, was the move of data analysis as there were synergies in analyzing the data or simply producing reports close to where data was produced and processes were owned. Fourth, came automation where the finance function could either skip offshoring/outsourcing altogether and simply automate processes directly. Fifth and on-going now is the moving in of AI and robotics which, of course, is also to some extent the fuel for the automation wave. So, looking at all these activities it means that 2/3s of the finance function has moved away from the frontline and is now being performed somewhere else. If we refer to the classic pyramid of tasks being performed in the finance function this becomes very clear.

It’s indeed a very small portion that’s left of the finance function in the frontline. The “back office” functions have become “performed somewhere else office” functions. I recognize that many companies might not be this far ahead in their transformation efforts but this is the clear direction companies are moving in so if you’re planning a long-term career in Finance then you better plan for this.

So, what do I do and how can I become a rounded finance professional?

The good news is you’re not without options if you want to learn the basics of finance and accounting and one can also question whether it’s even needed in the future. Here are some of the options I would consider if planning a career in finance and accounting.

Start at an outsourcing firm: Simply start at a vendor of accounting services where you will provide the basic finance and accounting to other companies. This should prove to be a good development opportunity as you will be exposed to different companies and industries and will be a good guide for where and to which company to go next.

Start at a small company: As said, not all companies have gone far down the transformation journey, yet, and for a long time still there will probably be smaller companies or even mid-sized companies that are doing most by themselves as well. So why not start there and gain the experience of a “classic” finance function?

Start in a graduate program where you get to go to a service center: Many companies still offer graduate programs and most of them have a finance track where you could get the chance to be expatriated to a service center for a few years to learn the ins and outs of transactional finance and accounting. Here you can also get exposed to other parts of the company as typically it’s not only Finance that has offshored responsibilities to the service center.

Skip it altogether as you might not be challenged on it anyway: The last choice is to just skip it altogether and bet on complete automation or the fact that you might not be challenged on the basics anyway. This is a risky part though because as soon as you find data is not correct (and you will all the time, unfortunately) you might have a tough time back-tracing the data production to find where the error occurred. In addition, even the transactional parts of finance and accounting are not part of the frontlines responsibilities anymore then you can rest assure questions will still flow your way if customers suddenly start complaining about the wrong invoice they received. If you don’t have the faintest idea about how to handle it then you can kiss the good working relationship you have with Managing Director goodbye. In short, I wouldn’t recommend skipping learning about transactional finance and accounting just yet.

So, there you go. A couple of choices as I see it. Don’t skip it yet but try to get some exposure to the basics of finance and accounting so you know what you’re getting yourself into and will have an easier time relating to all of the issues you will face once you start relating Finance to Business. You might be able to fake it until you make it but then again maybe not. It’s not impossible to get this exposure so why not seek it early on in your career?

What are your plans for a career in finance and accounting? How will you go about getting the needed experience to reach your goals? Of course, there’s not just one path to career success but there are choices to make along the way and choosing whether to seek exposure to transactional finance and accounting is certainly one of them. What’s your choice?

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