Financial Management Approaches - Speech or Presentation Example

Task one; Plan financial management approaches Introduction In order to enhance the financial planning of the company, we must create a model for strategic planning that requires to be met efficiently by the company. The first step is examining the budget as well as financial plans which will entail the following. Long term Budgets/  Plan Short term Budgets/ Plans Operational plans  Spreadsheet on the basis of financial forecast  Cash flow forecast  The key performance indicators (KPIs) for expenditure, manufacture, sales, efficiency, and profits for the company The exiting budget as well as the financial plan for the company might be accessed by checking on the demand as the expenditure of the company. Finding the cash flows that are acknowledged in the firm as well as examine if the source for cash flows are varying. Frequent checking on actual financial performance as well as preparation of reports concerning the annual position of the company is significant. Appraising the existing Budget and Plans and Find whether they are achievable or not The existing budget plans are being categorized with specific staff in the company so as to find out if the budget plan is attainable or not. The size of the business as well as the sort of business it operating are the key factors that will aid inn finding if the plan is attainable or not. The existing financial plans for the company are apparently documented, precise as well as very brief. The written results are very much attainable as well as entire of the contingency planning is as well in place in form of risk-control appraisals. Corroborate the existing plan The plan which has been presently created is as per the companies structure requirements as well as simply comprehended too as well as quite apparent in its intention. Entire of the forecaster, workings as well as information are found to be correct. Realizable The capacities of the area of accountability allocated as well as along with the team are in a position of delivering the good and services that are needed from the company with the allocated budget as well as time. Understandable The existing budget is very rational as well as might be comprehended easily as well as that is the reasons for the entire team members being in a position to comprehend it in a correct manner covering entire features such as the team members must understand the numerous activities that have been allocated to them under the budget. The budget as well has the supporting documents such as the spreadsheet projects for the target to be attained. Preparing to negotiate necessary changes to the budget Staff with whom concession will take place while making changes in the budget and Plans  While making changes in the budget as well as the financial plans, we must negotiate with the specific staff in the company which entails the supervisors, frontline executives as well as the finance controllers and accountant. Two issues for clarification Change inn of the product The change in price and cost of the forecasted product would significantly affect the budget in terms of revenue projection. The cost of inputs and salary wages The Increasing rate in the costs of inputs as well as the unexpected salary increases will affect the budget forecast since, this affect the forecasted revenue and net profit since, an increase in cost of input as well as wages would means an increase in the level of expose hence leading to a decline in the amount of reported net profit. Negotiate at least two changes. In order to ensure that there is a steady price forecast, we need to perform the analysis of the worst and best scenario in the economic performance in order provide us with the best average sales price to be used which will not change drastically that will create unfavorable variance in our projection. For the increase in salaries and we wages, we will ensure that only ideal as well as relevant personnel are employed in the company as well as install and effective machines that will cut on labor cost since, machines are ideal in providing efficiency as well as growth in the level of production at low cost unlike employing labor capital. Analysis of cost centre New strategy Sales Centre A Sales Centre B Sales Centre C Sales 700,000 %1000000 700,000 Commissions (Variable) $20,000 $20,000 $20,000 Wages (Fixed) $50,000 $10,000 $50,000 Telephone $3,000 $3,000 $3,000 Office supplies $1,000 $1,000 $1,000 Changes that need to be made Wages and Salaries The company is having a high value of wages and salaries which fixed inn every cost centre. The company must ensure that the value of wages is cost in order to improve efficiency in operation with improved net profits. This is made possible by cutting down the amount of labor force as well s replacing with the machine since, machine are efficient as well as cost effective in operations. The commission The amount paid as commissions on top of the salaries and wages for the staff is quite as well. The company can either pay the wages of $100,000 with no commission or change the amount of wages and makes it variable cost with 2.5% commission for every sales growth. Risk assessment and contingency plan to manage the risk of sales falling 20% Reviewing the Contingency plans   Scenario Analysis (20% sales decline)   FY Q1 Q2 Q3 Q4             Commissions (2% sales) 60,000 15,000 15,000 15,000 15,000 Direct wages fixed 200,000 50,000 50,000 50,000 50,000 Sales 3,000,000 750,000 750,000 750,000 750,000 Cost of Goods Sold 400,000 100,000 100,000 100,000 100,000 Gross profits 2,340,000 585,000 585,000 585,000 585,000 Effect of sales decrease (20%) 2400000 600000 600000 600000 600000 New Gross profits 1,740,000 435,000 435,000 435,000 435,000 Effect of 10% declines in sales level Scenario Analysis (10% decline in sales   FY Q1 Q2 Q3 Q4             Commissions (2% sales) 60,000 15,000 15,000 15,000 15,000 Direct wages fixed 200,000 50,000 50,000 50,000 50,000 Sales 3,000,000 750,000 750,000 750,000 750,000 Cost of Goods Sold 400,000 100,000 100,000 100,000 100,000 Gross profits 2,340,000 585,000 585,000 585,000 585,000 Effect of sales decrease (10%) 2700000 675000 675000 675000 675000 New Gross profits 2,040,000 510,000 510,000 510,000 510,000 Variance Analysis New Gross profits (10% delcine0 2,040,000 510,000 510,000 510,000 510,000 New Gross profits (20%_) 1,740,000 435,000 435,000 435,000 435,000 Variance 300,000 75,000 75,000 75,000 75,000 % change 14.71% 14.71% 14.71% 14.71% 14.71% The variation between the 20% decline in the sales level as well as the project 10% sales level, depict a variation of 14.71% which is quite significant in terms of variation in the sales level. As a result, comprehensive analysis of the future business situation and its impact on the sales level need to be made in order to ensure that the sales forecast is 95% accurate which is an implication that the result will at 5% confident level about the change in sales variations. The financial plans or budget are the structure that is designed for the company to work within. Bet when it is realized that they are not achievable any longer, and then we must make adjustment. Having a contingency plan as well as performing risk assessment is an ideal practice. The contingency plan for the company is depicted in the table below.   Contingency Plan Company name: Big Red Bicycle Pty Ltd Person developing the plan: Name Position Risk identified: Strategies/activities to minimize the risk By when By whom To stop breakdown of Machines, the company need to lease them As from the following financial period Stuart LaRoux who is the General operation manager To minimize the Changes in Price and Cost of input, the company need to buy in bulk as well as making contractual plan Adjusting the inventory at the start of the month Stuart LaRoux who is Operations General Manager To minimize the effect of Security Breaches, the accountant need to ensure that there is effective internal control in terms of secrecy and security. Any time the accountant feels that the internal control system is weak Pat Roberts ho is the senior accountant To improve the product standards, there must exist Quality Control A the time of production and manufacturing process Charles Pierce who is the production manager To reduce the risk of scarcity of personnel, the human resource need to ensure that flexibility of casual labor exist. Anytime when there is need of more casual laborers Holly Burke who is the Hr manager To reduce the risk of Financial Losses, the senior accountant and CFO need to ensure that there is improved measures on security. Any time during business Operation Michelle Yeo and Pat Roberts who are the CFO and Senior accountant respectively Task two: Implement financial management approaches The organisational needs The main organisation needs are the requirement of effective communication for convey message concerning the budget to the personnel. The information in the planned budget or the financial plan must reach as well as be communicated to the personnel in bigger approach for the accomplishment of budget implementation. The personnel must as well as have the right of entry to the right resources as well as systems that are required, so that they might execute their duty in an effective approach. The coaching/training needs of team member Training The personnel needs training as well as competent, secure system of record keeping as well as well trained use of electronic cash management system. When all these r=needs are provided to the personnel together with the well maintained machines as well as equipment and time, they will meet their deadline on time. It is the duty of manager to ensure that entire of the above resources are existing to the personnel on time so as to control financial procedure of the company in a right manner. Resources There are numerous resources that are required for execution of financial plan that entails resources as well as system such as human resources, financial resources, expert advice as well as physical resources. Overview of the budget and explain how the budget translates to expense allocations for the team. The budget and relevance to team member’s accountabilities A budget is a financial forecasting tool that is used by the company has guiding tool in its daily operation so as to ensure that the company goals and objectives are achieved within the set target and time. The relevance of the team member in accountability is that it will ensure that the budget estimate is prepared and competed within the set time frame by the company as well as minimise the misunderstanding between team members.  How the budget translates to expense allocations The ideal approach concerning supervision as well as appraisal of the expenditure and cost incurred by the company is adjusted by the nature as well as the size of the company as well as the style of administration and the structure of management. The key aim is to earn profits that are worked out by appraising the dissimilarity between sales earned as well as the cost incurred. To proper control the budget as well as the financial plans, we must gather entire data existing for the efficiency of implementation of financial management procedure in the company as well as we need to gather information for the work team for assessment. It entails gathering entire paper based or electronically collected information that is linked to cash flows, files for paid cost as well as entire service invoice, workers timesheets, petty cash receipts as well as income and expenditure. These are vital information since; they are significant as well as efficient in finding the cost overrun as well as other documentation and other intricacies such as generating budget variance analysis reports concerning the real income as well as expose done against the budget as well.  Evaluation and recommendation to improve the overall financial processes in your work team  In order enhance the entire financial procedure in the work team; there need some advice that might be followed by the company. Enhance the risk control system that must be appraised as well as latest risk and opportunities might be recognized frequently. Enhance the financial business procedure that will aid in developing as well as determining apparent as well as written business procedure as well as controls in the company Frequently, train the personnel so that they remain updated concerning the polices, controls as well as procedures. The financial internal controls must as well be improved for the internal security of the company.   Reference list Brigham, F.E. and Ehrhardt, M.C. (2010) Financial Management Theory and Practice, Cengage Learning. Brigham, E.F. and Houston, J.F. (2009) Fundamentals of Financial Management, 12th edition, Mason ,OH: Cengage Learning. BSBFIM501A Manage budgets and financial plans, Aspire Training & Consulting. BSBFLM513A: Manage budgets and financial plans within the work team, [Online], Available: http://www.mintrac.com.au/files/dip_units07/BSBFLM513A%20Manage%20budgets%20and%20financial%20plans%20within%20the%20work%20team.pdf [2 April 2012]. Hansen, D.R., Mowen, M.M. and Guan, I. (2009) Cost management: accounting & control, 6th edition, MAson,OH: Cengage Learning. Hightower, R. (2009) Internal Controls Policies and Procedures, Hoboken ,New Jersey: Jpohn Wiley & Sons. Read More