Simplifying Financial Analysis - ICEBERGS?

The CIPS (The Chartered Institute of Procurement and Supply, UK) Intelligence Hub (https://www.cips.org/intelligence-hub) has great resources across fourteen key procurement and supply topics, including Financial Analysis and Management. "Simplifying financial analysis", by Colin Linton MRes MBA PGCHE DipM DipFS FCIB FCIM FCIPS FCIEA FHEA FInstLM, is one of my favourites. I quote from his introduction: ?

"Based on recent research, ‘Financial Analysis’skills are crucial to people working in procurement roles. In a survey of experienced procurement practitioners, financial analysis skills ranked fifth in the ‘top' ten contract management skills. In addition, respondents widely acknowledged that financial analysis skills are also applicable to most roles in procurement and supply.

Why? Finance is often the common language across different internal stakeholders and in the boardroom. Procurement professionals need to be able to communicate with all stakeholders, especially those within the organization, so being ‘fluent’ in their language is important. But it is equally important that procurement professionals are confident about applying financial analysis to manage risk. Being able to spot early warning signals of potential supplier issues, for example, is a vital part of the procurement professional’s job. Understanding a supplier’s finances can also help achieve a better outcome from negotiations.

For those who are not confident with numbers being faced with a set of financial statements can be extremely daunting. Especially when working in a procurement role where the expectation of other stakeholders is that you will have a good level of financial analysis skills. But the good news is, you can get to grips with financial analysis by applying a structured approach. You do not need to be an accountant and it is not necessary to know how to calculate hundreds of ratios – far from it. The procurement and supply perspective provides clarity of focus on a relatively narrow number of key financial performance measures."