Manage Money : What’s a Profit & Loss Account?

There are no non-finance persons in any organisation. Finance management is the ability of every individual to understand the financial consequences of their actions – and then only do those things that enhance profitability and avoid those that hurt it.

How is running a business like playing a game of cricket? What is the objective of playing the game? To win. What is the objective of the game of business? To make profits!

Whose actions win the game for you - of the players on the field or the score-keeper’s?

The Accounts person is like the score keeper in a cricket match. It’s not the scorer who wins the match for his team but the players: the bowlers, batsmen, captain. Without the scorer, the match loses meaning.

In much the same way, the actions of each individual in every department help an organisation succeed. If their actions are financially intelligent the organisation will make profit. If not, it may suffer loss.

When anybody says he/she is a non-finance person, it is like saying ‘I don’t care what the financial outcome of my actions will be’. That is ridiculous. You must never do anything without understanding how it affects the organisation’s profitability!

When in addition to your designated area of responsibility you also call yourself a Finance person, you mean, “I take financial responsibility for my actions”.

When a large majority of the workforce says this, the organisation as a whole flourishes.

It does not matter whether your company provides services or products through software, education, manufacturing, entertainment, media, or whatever, we are all in precisely the same business – that of generating profit.