The most essential skill you bring to a board table?

“A good board has a strong skills matrix.”

You have heard it a hundred times. We talk up our unique strengths and lived experience, we colour-code the matrix, we pat ourselves on the back for diversity of thought. All of that matters. Yet there is one capability that every director, not just the treasurer, must bring or be supported to build: sound financial skills.

You do not have to be a certified accountant. You do need to read a balance sheet and analyse a profit and loss. You need to recognise the red flags that threaten solvency, sustainability, and staff salaries. When a business goes under,

“the Treasurer is an accountant and across that stuff”

will not stand up in court. Each director has a personal duty to understand the numbers well enough to ask the right questions and make the right calls. Australian research and case law have been crystal clear on this point for more than a decade.

Where this landed for me

Last week I went to Running For Resilience. After a rough few weeks my resilience was low, and a friend gave me the firm nudge I needed to literally pull myself out of bed and get some fresh air. I ended up walking with Ivan Slavich AM FAICD. We talked about something we both see across boards and management teams: basic financial skills are patchy. Good people, big hearts, strong purpose, but not enough confidence with the numbers.

I am often perplexed by how we box ourselves in to “what I can and cannot do.” Anything can be learned. I am not asking you to change careers, I am inviting you to find the way you learn best, then go and build this muscle.

Why finance is the non-negotiable

1. Your legal duty is personal. Australian law places a duty on each director to prevent insolvent trading. You must form your own view about solvency and the financial position, you cannot abdicate that to the finance committee or the auditors.
2. Courts expect basic financial literacy from every director. In the well-known Centro decision, the Federal Court found directors breached their duties by approving accounts that misclassified short-term debt. The Court emphasised that directors must be able to “read and understand” financial statements and apply an inquiring mind. That does not mean you must master every accounting standard, but you do need to grasp the basics and pay attention to what you are agreeing to. UNSW Sites
3. The governance research is catching up. Researchers at Queensland University have been building an evidence base for a baseline of “director financial literacy” that distinguishes literacy from expertise and maps the core concepts directors should know. Their work aims to help boards measure and develop this capability systematically, not leave it to chance.

“We leave this to the finance people.” Please do not.

It is common to see otherwise capable boards retreat when the finance papers land. The language gets opaque, time gets tight, and everyone glances at the treasurer. This is precisely when your mission, reputation, and community need you to lean in. Director financial literacy is not about turning everyone into accountants. It is about giving every director the confidence to interrogate the story the numbers are telling.

A plain-English primer you can take to your next meeting

Here is a place to start, what questions might you add?

1) Profit and loss (P&L): How healthy is our engine right now?

• Are revenues diversified or concentrated in a few funders or products?
• What is happening to gross margin and operating margin, not just top-line growth?
• Are expenses drifting upwards faster than revenue, especially fixed costs like staffing or leases?
• Are we approving additional expenses outside of the budget and why?

2) Balance sheet: Have we got the fuel and buffers to absorb shocks?

• Liquidity: current ratio, cash at bank, undrawn facilities, and the timing of payables and receivables.
• Restricted vs unrestricted funds in NFPs: can we actually spend that cash on core operations or is it tied to projects?
• Provisions and contingencies: leave, make-goods, rebates, potential legal liabilities.

3) Cash flow: Can we sleep at night?

• Operating cash flow over the last three to six months.
• Any grant timing that needs active management.
• Scenario view: if income falls 10 percent, or a grant is delayed 90 days, what breaks first?

It is the duty of a Director to ask questions, with an understanding of the basics of finance you will ask better questions, earlier. That is the point!

How to build your finance muscle without changing careers

Everyone learns differently. Here are pragmatic paths that have helped me and many colleagues.

1) Find a mentor or coach. I am a practical learner. I like to absorb information, then go and play with it. Early in my career I asked a friend with deep finance knowledge to be my “finance mentor.” She did not drown me in jargon. She linked concepts back to the business I was running. We met informally and formally, wine helped, and each time I left with something I could apply. If you are “looking for a person in finance,” make the ask, be specific about your learning goals, and set a cadence.

2) Do targeted training. Short, director-level courses can rapidly lift confidence. A solid starting point is the Australian Institute of Company Directors’ Finance for Directors program, which focuses on exactly what boards need from P&L, balance sheet, and cash flow literacy. Have you found others that worked for you?

3) Use reputable Australian resources.

• Not-for-Profit Law by Justice Connect is a go-to for plain-English governance and financial responsibilities for charities and NFPs. tmsconsulting.com.au
• Institute of Community Directors has practical tools on finance for board members that suit community organisations. Website
• AICD materials and webinars remain a staple for directors at all stages. AICD
• If you enjoy digging into the research, QUT’s work on director financial literacy is excellent for understanding what “good” looks like and where to focus. qut.edu.au

4) Build “finance reps” into your board calendar. Ask for a 15-minute “teach-in” at the start of each quarter. Rotate topics: reading the cash flow, understanding provisions, interpreting grant acquittals, calculating unit economics. Ask management to include one plain-English page in the pack: “What the numbers are telling us this month.” If you are the finance person on the board, this is your time to flex and share the knowledge.

5) Pair up. Buddy newer directors with a finance-comfortable colleague for the first three meetings, with a quick debrief after the finance item. Normalise questions. Celebrate the “obvious” questions that get to the heart of risk.

6) Practise on real numbers. Take last year’s audited accounts and walk through them with a mentor. Where would you have asked for more information? Where do you see concentration risk, unfunded commitments, or early signs of a cash crunch?

This also leads to the CEO or Management’s skills. If Finance isn’t there thing either this can have critical implications to operations. So be sure to open the conversation about mentorship, formal training and building this skill with them.

A quick self-check for every director

Use this at your next board meeting. If you cannot answer “yes” to most of these, pick one to improve this month.

1. I can explain our organisation’s revenue model in one paragraph.
2. I understand our two biggest cost drivers and how they are changing.
3. I can read our balance sheet and point to our liquidity buffer.
4. I know whether any of our cash is restricted.
5. I can interpret our operating cash flow trend over the last quarter.
6. I understand our debt or grant conditions that affect cash.
7. I can name three risks to solvency and our mitigations.
8. I know the early-warning signals we watch each month.
9. I can explain, in plain English, why we can or cannot afford a new initiative.

“But surely this sits with the Treasurer?”

You can and should rely on officers, management, and auditors for specialist advice. The law recognises that. What you cannot do is outsource your judgement. The Centro case made that plain. Directors must bring an inquiring mind to the financial statements and the underlying business, and ASIC expects that attitude from each individual director.

The bottom line on insolvency

No director wants to walk into an insolvency. Prevention is a collective job, and the law treats it that way. The Corporations Act imposes a duty on each director to prevent insolvent trading. If there are reasonable grounds to suspect insolvency, you must act, ask for advice, and work through options quickly. Knowing how to read the numbers is not a nice-to-have, it is a legal and ethical obligation to your people, your beneficiaries, and your community.

Start small, start now

If finance feels intimidating, start with one action this week.

• Book a coffee with a finance mentor. Bring your last board pack and three questions.
• Enrol in a short course that fits your schedule. The right course pays for itself the first time you catch a risk early.
• Add one page to your next board pack called “The story behind the numbers.”
• Put “cash first” on the agenda. Talk operational cash flow before anything else.