Do you know the difference between accounting and finance? If you said there isn’t one, you’d be wrong. And that’s okay, but we’re here to help you understand that nuance and dive into why financial literacy is more critical to your job than you might realize, even if you don’t actively work in a department that crunches numbers.
So, let’s break it down. Accounting is the act of putting numbers in the books. Finance is interpreting those numbers to strategically align your business goals and objectives to plan for future growth.
While both are critical for business operations, we sat down with Lori Ware, SVP of Casino Finance for Yaamava’ Resort & Casino at San Manuel, to understand why business financial literacy is a critical part of any job and some of the common things you should know.
You Don’t Have to Be a Numbers Person
For those not inclined toward math, anything related to accounting, finance, and numbers can be a bit intimidating to think about. But you don’t have to be the person balancing the ledgers and determining cash flow to understand how the numbers impact overall business health and what it means for your department and your budgets.
During Ware’s career, she’s been in pretty much every financial department you can think of, from entry-level accounting assistant to a financial controller to vice president of finance and even chief financial officer. It’s safe to say she has a strong handle on both the accounting and finance sides of the gaming and hospitality industry, but she broke down the main thing that’s critical for anyone, in any department, to know.
You might have heard net income is referred to as the company’s bottom line. It’s an overall metric that allows you to have a better understanding of the profitability of a company so you can scale up or down as needed and allocate budgets to where they can have the most impact.
The formula for net income is relatively simple:
Revenue (the overall money a company takes in) – Expenses (the overall cost to do business) = Net Income
So, why is net income so important for you to know? It provides an overall picture of the health of your company and whether or not you are on a growth trajectory. Understanding net income lets you decide if you have a case for hire, if you can plan for new projects, or if you can give additional budget resources to different departments.
In addition to net income, Ware says it’s important to understand the terminology and metric that is more specific to your particular department. For example, someone working in slot operations would want to understand their wins per unit and someone working in operations for table games should pay attention to their drop and hold per table.
You don’t have to be the person calculating these metrics, but having an understanding of them helps you make operational decisions like whether or not to swap two slot machines on the floor to see if that boosts overall performance, or if a machine has run its course and should be phased out.
Three Mistakes to Avoid
Ware believes in the value of companies that allow you to put your hand in the air and throw out big ideas without having to fear mistakes or the results of failure. This is something she values in working for Yaamava’ Resort & Casino at San Manuel. However, with robust experience comes an understanding of the following mistakes that you should strive to avoid.
Lack of Training
The best way to avoid financial mistakes in any instance is a robust training program. If your company provides that type of education, take advantage of it even if it doesn’t seem like it directly relates to your job. If you are a department head, partner with your financial departments to put together programs for more general employees so they understand the basics of business financial literacy.
No Checks & Balances
Within areas relevant to your department, have a dedicated resource that can quality check the findings and numbers associated with your specific budgets and goal metrics. Don’t rely on outside bodies to double-check your digits as this creates a greater risk for the company overall. If you are the numbers person, make sure you have someone well versed enough to be that extra layer of protection.
Not Knowing What to Look For
This takes the education aspect a little bit further. Within each department is an ebb and flow of budget coming in and expenses going out. Ware encouraged employees to pay attention to those numbers, understand what they mean for you and your work, and how to identify if things look off. This helps ensure that accruals properly account for services that have already been administered and that you have an understanding of where your overall yearly budgets are tracking. When you have your finger on the pulse, you are better equipped to make quick pivots to meet goals.
Want to Get More Hands-On?
Does all of this sound so good that you want to get involved in the numbers and finance departments? Ware thinks you should. “It’s so incredibly fun,” says Ware. “Things move rapidly and you’re able to understand and articulate information about the performance of a business.”
She recommends that those who are looking to get into accounting and finance take classes around both. Figure out what you like more–is it being hands-on with the numbers or using the data to plan and problem-solve? Identifying what excites you most will help you determine which path you should pursue.
Ware also recommends finding a mentor. As with any college or professional development course, things in the real world function differently from a classroom environment. Mentors can help you better understand how studies apply in real-world environments and connect you to entry-level opportunities.
Whether looking to be involved in business finance or not, these basics of financial literacy will help you grow your career and better inform your approach to day-to-day operational strategies.