Most people in a business can affect its financial performance. As a manager, you don't have to be a financial expert, but you do need to know how much money is needed, when it is needed and what it is needed for. This is because even a profitable business can still go broke if the finances are not managed properly. Every decision regarding resources and people has financial implications for the organization's profitability and viability.
Profitability occurs when income exceeds costs over a specific period, usually a year.
Viability is the ability to pay bills when they are due - in both the short and the longer term. Understand where money comes from and where it goes Money moves into, through and out of a business in a cycle. Direct costs are those which can be directly attributable to the production of a product range or provision of a service. Indirect costs, sometimes known as overheads, are those costs, which are incurred in running the business as a whole, but which are not directly attributable to producing a particular product. Remember income and cash are not the same thing Income is recorded when you issue an invoice for an order.