The Introduction to Finance Management Course
Welcome to the free online finance management course. Students will be introduced to a general overview, history, and the future of finance management. We’ll then explore the challenges, opportunities, and next steps for finance managers.
Course Navigation:
- What Is Finance Management?
- History of Finance Management
- Future of Finance Management
- Challenges & Opportunities in Finance Management
- Next Steps for Finance Managers
This free online finance management course directs you toward free videos, articles, and podcasts coupled with questions to aid in processing this integral field. Each course section is created to encompass two to three hours of learning material.
Whenever you see this icon, it is time to stop and watch, read, or listen and reflect.
At the end of each section in this free online finance management course is an opportunity to invest further. These suggestions offer anything from books and subscriptions to courses and professional associations. The further investment opportunities offer a wide range of financial and time investments to further studies and enrichment in the field of finance management.
1│What Is Finance Management?
A finance manager is responsible for drawing up financial reports, directing investment operations, and creating plans that are in-line with the long-term financial goals for their organization.
Enterprise Resource Planning & the Cloud
Enterprise Resource Planning is a suite of software that organizations use to deal with their day-to-day activities – from project management to accounting to procurement – including enterprise performance management, to helping to plan, predict, and report on the organization’s financial activities. Having all these systems together in one source helps avoid duplication of data and ensure data integrity. Specifically, for the finance side, an ERP provides financial transparency, a reduction in human error, better budget planning tools, and automation to improve productivity. Today, many organizations use cloud-based ERPs. This Software as a Service (also known as Saas) has a lower start-up cost. Organizations of all sizes rely on ERP to keep them running.
Read this article to understand the role of ERP, specifically as it relates to finance. As a finance manager, an ERP, whether cloud-based or not, is an essential part of how you do your work. Spend some time learning more about the fundamentals, history, and value of an ERP for your organization in this article. How do you see the value of an ERP for a finance manager, specifically?
Business Intelligence
Another important tool for a finance manager is the implementation of business intelligence in their department since the finance department, specifically providing insight and strategy for the organization based on data reports and statistical analysis. This is where Business Intelligence becomes important because BI creates a more thorough view of the organization’s data, helping evolve with market demands, and remove inefficiencies and redundancies. Together, BI and finance are a powerful combination because the information provided through BI allows a finance manager to have the necessary information needed to provide strategic advising to the organizations.
There are many ways finance managers can harness BI to increase their value within an organization. As you read this article, consider the power that a good understanding of how BI works can be used to a finance manager’s advantage. Looking at your own background and experience, where might you have gaps in this area that you could use further training?
How do you see this idea of finance managers as strategic advisors and partners beyond simply “number crunchers?” Take a listen to this podcast episode from CFO Talks that discusses this very idea.
Further Thought
If you’re looking to get an in-depth overview of what a finance manager needs to know, watch this free three-hour Finance Management course. It covers an expansive range of topics, from understanding how to measure your organization’s financial performance to learning general accounting principles to how to secure financing to how to recruit and train other finance employees, plus more. If you’re looking for a course to give you a broad idea of what a finance manager is tasked with once this free online Finance Management Course if over, this is a good one to take. You will need already to have a basic knowledge of financial math and accounting.
Further Investment
The world of finance is broad, and it’s always wise to have an idea of the background and history of the industry to work in. Here is a list of 20 “must-read” books for anyone in finance, including managers. Pick a few books to read, or maybe find the audio book to listen to, to gain more insight into the finance management world. They can provide you with that historical context, offer insights on mistakes to avoid, and describe better ways to practice finance management.
2│History of Finance Management
Early Finance Management
In some respects, it could be argued that finance management has been around as long as bartering and other trade systems, albeit in a very different form than it is today. Bookkeepers developed out of the need to have a record of goods exchanged, for example.
Spend some time reading about how money has evolved from bartering to currency in this article. Does this history change the way you view the value of money?
One of the major revolutions in the history of finance management was the advent of double-entry bookkeeping, which was codified in the late 1400s by Luca Pacioli, an Italian monk often referred to as the father of accounting. On the surface, double-entry bookkeeping might not seem particularly revolutionary, but it laid the foundation for what, today, is our capitalist society.
Learn more about these origins in this interview with author and historian Jane Gleeson-White, who wrote a book on the birth of double-entry bookkeeping and its economic impact during the Italian Renaissance. What do you think about Gleeson-White’s argument of the shortcomings of this mode of bookkeeping and the very real economic and societal impacts today?
The American Railroad
As we understand it, finance management has its roots in the 1800s and early 1900s as a response to industrialization and the business complexities that came along with mergers, expansions, reorganizations, and other aspects of large enterprises that had not existed on such a scale until this point. In the United States, in particular, this was spurred on by the creation of the rail system. The rail system required complex systems to determine rates, the collection of fares, how the distribution of goods was accounted for across vast swaths of land, and the assurance that things were being done in the most efficient possible ways. This created a need for financial concepts like production reports, operating ratios, and other metrics.
Learn more about how the railroad system changed the face of business in the U.S. in this article from Bloomberg.
1940s-1950s
In the 1940s and into the 1950s, a modernization in baking arose with things like the Charg-It and other precursors to our modern-day credit card. To know why our current finance systems exist as they do, we must first understand how they came about. Spend some time reading this article by TIME that covers the birth of the first credit cards. This was a period where finance management became concerned with aspects of financial analysis and planning.
1950s to Present
Since the 1950s, finance continued to evolve alongside new technologies, economic ideas, and emerging markets. It’s scope widened to what it is today with new ideas like efficient market theory, business valuation models, financial modeling, and capital structure theory that also became codified in the industry.
Further Thought
For a subject as broad as finance management, this is truly not even scratching the surface. But there are historians who have written and researched extensively on the subject. Spend some time on the History of Finance website, which is a site and a network that aims to facilitate exchange on the subject of financial history.
Further Investment
Pick up a copy of Double Entry: How the Merchants of Venice Shaped the Modern World – and How Their Invention Could Make or Break the Planet by Jane Gleeson-White. This book can help you develop a more nuanced understanding of how this foundational system created centuries ago has direct consequences for everyone living in our current global society.
3│Future of Finance Management
Because no industry or field can operate in our current systems without a finance department, finance managers face continual evolutions and changes to their work. Watch this Future of Finance webinar from Oracle NetSuite and Entrepreneur that looks at the trends, strategies, and predictions in the field of finance for 2020 and beyond. This webinar covers trends that finance leaders were seeing, their predictions for new skills to hone in on, what key performance indicators to track, and how to budget for the inevitable time when things don’t go as planned. As you listen, consider if the trends they predicted are still happening in light of COVID-19. And do their suggestions for budgeting with uncertainty still work with such a disruption?
Predictive & Disruptive
The role of a finance manager does not just supply numbers and data. As we’ve touched on, today’s finance managers are expected to strategically move their organization forward. With that in mind, it’s important for finance managers to be predictive and be prepared to also be disruptive, offering new and innovative ways of doing business.
KPMG, one of the big four accounting firms, has put together six focus areas for finance managers and CFOs to employ to create healthy and smart disruption: Innovation and investment, extreme automation, insights and analysis, organization and talent, service delivery model, and risks and controls. As you read through these focus areas, what are you already doing in your organization, or what do you see your finance department doing? And of these suggestions, what outcomes do you see, if any? What of these focus areas are still applicable in our current COVID-19 world?
COVID-19
We can’t escape the fact that COVID-19 has and will continue to play a vastly significant role in the future of finance. And while some earlier predictors of trends and strategies like we just looked at are still relevant, others aren’t. COVID-19 has already had huge economic impacts on markets and organizations in both direct and indirect ways.
So, how do finance managers, who are used to things being relatively predictable, manage in these unclear times, both in the here and now and for the uncertain timeline of the future? Read through this strategy and corporate finance article from McKinsey & Company for some insights on making the leap into the uncertain waters in an industry that requires accuracy and assurance.
Forbes put out an article on what’s next for finance sectors post-pandemic. What are your perspectives on the highlighted areas of new operating models for the industry?
Further Thought
The instability that has been brought on by COVID-19 is not an entirely new problem, and much has been written regarding past events that can help finance managers navigate this period. Read this piece from Finance Research Letters on COVID-19 and finance. What are some possible ways for finance managers to help their organizations move forward with regards to COVID-19 in light of what we’ve seen in the past?
Further Investment
Finance and technology are often close companions and will be a great topic to dive into once this free online finance management course is finished. Financial Technology offers innovative options for finance managers to help provide better ways of portfolio and cash management, payments, and client interfacing. The Futurist Institute offers The Future of Finance course, which provides a broad understanding of Financial Technology and trends that can help finance managers execute their work in a more accurate, efficient, and strategic way. This course is made up of 10 courses, plus a bonus on blockchain, covering topics such as banks, crowdfunding, robo-advising, bitcoin, and digital currencies.
4│Challenges & Opportunities in Finance Management
Read this CFO article by Forbes, written in early 2020 just before the COVID-19 pandemic hit the U.S., which covers what some of the country’s CFOs were considering their challenges and the opportunities within. As a finance manager, how might these priorities be similar to your own? And, with the onset of the pandemic, how have they changed for you or for the finance industry more widely?
Navigating Finance and COVID-19
How financial organizations and departments handle COVID-19, and future pandemics, is one of the most pressing conversations for financial managers today. The economic and financial impact the pandemic has wrought and continues to have cannot be understated. It’s also important to remember that these challenges are connected to the responses of local, state, and federal governments, as well.
For some insight into how financial firms are managing COVID-19’s challenges, listen to this conversation with the CEO of Citigroup, Michael Corbat, and Amanda Chen with Columbia Business School, as they discuss Citigroup’s initial response and discuss future challenges moving forward.
Accountability & Blockchain
One of the challenges the finance industry faces is around the issues of fraud and accountability. Some of these come through issues of inaccurate record-keeping or slow financial reporting due to out-dated systems, human error, or other unintentional issues. Other times, inaccuracy stems from illegitimate places and is used for fraudulent purposes. Issues of accurate recording keeping can be minimized by finance managers relying on accountants and bookkeepers who have the interdisciplinary skills needed to keep accurate accounts, for example. But perhaps blockchain presents an opportunity for finance managers to use this still-emerging technology to advance accuracy in the profession while cutting down on the potential for fraud.
Watch this TED Talk by Jacob Lewtan, an accountant and innovator. Consider the ways blockchain can be integrated into your organization and the ways it may, or may not, serve investor interests.
Then, take some time to read this 2019 paper by Lewtan, McManus, and Dr. Saeed Roohani that delves more deeply into ways blockchain technology can be used by finance managers for financial reporting and governance.
Evolving Opportunities
Despite, or maybe because of, the global financial uncertainty today, the finance industry continues to grow and adapt as it always has. Many opportunities and challenges face finance managers, from working to manage big data and keep it safe and following ever-changing regulations, to keeping commercial customers and stakeholders happy.
Here are some common challenges that face finance managers today. As you read, consider what opportunities can also be found within these challenges.
Further Thought
Blockchain technology has an enormous amount of potential for finance managers. If the talk by Jacob Lewton sparked your interest, consider this course on Blockchain and Money from MITOpenCourseWare. This will be a great companion to this free online Finance Management Course. The blockchain class covers the fundamentals of blockchain technology from a commercial, technical, and public policy standpoint. It also covers the current uses of blockchain in the financial sector, as well as possible future uses. This course was filmed in 2018, but that doesn’t mean the information is antiquated. Note that the videos are actual recordings of the MIT course for an entire semester.
Further Investment
The challenges facing the finance sector are many, but the same can be said for the opportunities. However, it can feel isolating navigating both challenges and possible opportunities alone. Consider joining a financial association, such as the Society of Financial Service Professionals. Society of FSP is the second-oldest professional financial services association in the country, originally founded in 1928. There are now over 150 chapters and 11,000 members. It is important to note that Society FSP does require members to hold an up-to-date credential. The society has members from across the finance field, from CPAs to financial advisors to insurance experts and beyond.
5│Next Steps for Finance Managers
Mathematical Foundations
If you’re new to finance management, it’s important to be sure you’ve got the information you need to confirm that this is an industry you want to work in.
Returning to MIT’s OpenCourseWare offerings, take an hour to watch this class from the course Topics in Mathematics with Applications in Finance. All finance managers need a strong background in math, and this class introduces key terms and ideas regarding finance, markets, and quantitative analysis.
First Steps in Finance
Aswath Damodaran teaches finance at the Stern School of Business at New York University. He has created a playlist of short videos on the foundations of finance on YouTube. These videos cover the basics of finance, the structure of businesses, valuation, risk, and beyond. Each video is quite short, anywhere from 10 to 20 minutes, and will give you a great primer or refresher on the foundations of the industry. Start with the first video in the series on the First Steps in Finance, which covers modern finance’s foundation in its trust of cash flows and its measurement of risk. If you’re interested in more, the entire playlist is just under three hours of watch time.
Looking Toward the Future
The finance industry, as we’ve discussed previously, and as is true for all industries, is continually in flux. Finance professionals must embrace these changes and evolve with the new opportunities that come along.
The CFA Institute has put out a report that looks at how both employees (in their roles, skills, and careers) and employers (with organizational culture) impact the role of investment professionals over the next five to 10 years. While this report is specific to the investment field, the data and trends are of value and importance to anyone in the finance industry. Learn more about the CFA report here and then jump into the interactive site to learn more about the findings and results.
Further Thought
Check out Abnormal Returns, a blog from Tadas Viskanta, who is a private investor with over 25 years of finance experience. Viskanta is the Director of Investor Education at Ritholtz Wealth Management LLC and started Abnormal Returns in 2005 as a hobby. In particular, spend some time with his “Links of Day” posts. These posts have daily news on markets, strategies, companies, and other information relevant to finance managers coming from trusted sources. You can also sign up to get his most recent posts in your inbox to save yourself time. If you’re looking for more vetted, well-regarded blogs on finance, explore this list of finance blogs compiled by Investopedia.
Further Investment
It’s always good to stay up on the latest news, trends, and thought-pieces in your industry. As the finance world is always evolving, so should you. The Financial Times is an excellent resource for all aspects of business and finance, from pieces on how to make diversity efforts actually effective to the impacts of working from home and beyond. While some of their articles are available without a subscription, you’ll need to sign up for one of their regular Financial Times subscriptions to get access to all of their pieces. You can also sign up for their Coronavirus Business Update, which covers how the epidemic is impacting markets, businesses, and the workplace. This newsletter is free for the first 30 days and goes out three times a week.
This is the end of our free online Finance Management course. We hope it gives you a good background on the topic!