The ability of an individual to raise capital for his company and successfully deploy that capital for useful purposes, through appropriate financial calculations, is known as his corporate finance skills.
Corporate finance skills, therefore, refer to the ability to make appropriate financing and investment decisions or at least make a valuable contribution in doing so. An individual with such skills is essentially required to help his company (or the one he works for) manage cash at hand and find sources for raising additional capital for the purpose of running and growing the business, making valuable acquisitions, and planning for the future.
Why are corporate finance skills important
The wisdom and power yielded by corporate finance skills cannot be matched by any other. They are, therefore, very significant for a successful career as a manager.
Corporate finance skills enable individuals not only to fulfill the current financing needs but also to forecast any future funding requirements, on the basis of which new strategies are devised. Moreover, with the help of these skills, individuals/managers are really facilitated in the identification as well as selection of the value adding projects or strategies for a business.
Therefore, it is safe to say that a company and its top-level executives hold a high regard for any individual with corporate finance skills who is making valuable contributions to the investment and financing decisions of the firm because, essentially, he is the reason the business prospers and grows.
How to improve corporate finance skills
Following are some of the ways in which you can improve your corporate finance skills:
- Make your base strong. Basic knowledge of accounting practices is always an important part of corporate finance because the documentation of a company’s financial transactions and the preparation of its financial reports and statements are the prerequisites for performing trend analysis. Therefore, your accounting skills must be strong in order to collect all relevant data and report on it.
- Improve your cash management. Managing the company’s cash well is extremely important for improving corporate finance skills because it enables good strategic planning for the future. Always try to implement as well as adhere to the budgets set by the company and conduct a thorough investigation for any variances observed. Using these variances between budgeted and actual numbers, along with a thorough knowledge of the financial statements of the company, an individual becomes highly capable of building financial forecast and planning effective strategies accordingly.
- Collaborate with others. Collaboration through strong interpersonal skills is very important for better corporate finance skills. it will help you liaise with a lot of people from within your team as well as those from other departments. It will provide you with useful insights about how the business is being run and what aspects need the most attention. This way your contribution to financing and investment decisions of the firm will be more valuable since it will be based on facts rather than assumptions.