Confronting Financial Jargon

You've felt that feeling before.

You're in a meeting.

They're using financial jargon.. again!

And you don't understand... again!

Yet... you just nod and smile.

Because you're meant to understand.

You're part of the management team.

You're writing down the words that you're going to "Google" as soon as the meeting ends... in your head.

Not on paper of course, in case someone else sees.

Financial words fly around the work place like a flock of birds. But the harsh truth is - very few managers outside finance understand them and are part of the conversation.

There is a fear associated with admitting to not understanding finance and so.. non-finance managers just fake it. Which.. ultimately leads to incorrect financial decisions and this drastically impacts profits.

I've been told, in honest and open conversations with non-finance managers that there are a number of factors involved - there's the fear, there's the intimidation, there's the embarrassment and most of all - they just don't want to look stupid in front of their colleagues.

So, how should non-finance managers confront financial jargon in the workplace?

Accrue for this, amortize that, this affects EBITDA, this needs to be provided for, this should be written off, we need to impair that, depreciate this, reverse that and capitalize this.

You'll notice that most financial jargon words are VERBS- they involve some sort of action, and that action impacts the financial statements in some way. Non-finance managers need to have clarity on what these verbs mean, so they know the impact of their actions on the organization.

Don't be afraid to ask the following questions:

1. What does it mean to accrue/amortize/provide for etc..?
2. What is the EFFECT on the P&L of accruing/amortizing/providing?

These two questions will allow you to understand what the financial word means and what it's impact or effect is.

Take a look at this clip for more tips on confronting financial jargon:

TIP: Don't be afraid to ask!!!

And if you are, you might want to consider our course which will get your non-finance teams fluent in financial jargon. DM me or visit www.accountingmadeeasy.co for more info.

Best,

Mark