Financial Management

Many people would expect starting a business to be very easy. With a product or service to sell and enough knowledge to market it properly, many people think that they are ready to go. Starting a business, however, takes more than just products or services and simple knowledge. It takes much more if you want to make your business grow.
At the very start of the business, owners or shareholders will instantly be faced with financial matters that require financial decisions. Questions such as what assets to invest in and where to get the cash needed for such investments would require financial know-how. And as the business venture thrives, shareholders have to manage daily finances and make long-term financial decisions. All of this definitely requires more than just a little knowledge in business. It requires knowledge in an entirely different area - the area of financial management.

Defined, financial management is the process of planning financial decisions with the ultimate goal of maximizing the stockholders' wealth. In the world of finance, financial management is also known by other names like corporate finance, business finance, and managerial finance.
While the ultimate goal of financial management is clear "maximizing stockholder's wealth," the path leading to this ultimate goal is paved with other small goals. Goals like day-to-day profitability and properly managing daily finances are generally regarded as short-term goals, and achieving these goals belongs to the realm of short-term financial management. Aside from these, financial management also tackles other long-term goals, including business profitability and viability.
Achieving the goals of financial management, both long term and short term, involves a lot of processes and activities. These usually include cash management, financial risk management, financial accounting, managerial accounting, and others.
Now, these may sound like a multitude of tasks, especially for businessmen who are only managing small businesses. With the many financial management software products available, however, handling all of these tasks may become easier. Alternatively, businessmen may avail themselves of the services of a financial manager or seek the aid of companies providing financial management services.

Program Financial Management

Program Financial Management includes identifying sources of funding, integrating individual project budgets, developing a overall budget and controlling costs throughout the lifecycle.
Program finance management sets the structure for managing finances efficiently. Key elements of finance management includes aggregating the individual project budgets as well as budget for the effort involved in managing the initiative as a program.
A program is a financial investment. The ability to steer the program within the budget limit has a direct impact on the organizations revenue. A common understanding of the cost drivers and the cost limits are essential in finance management.
The primary purpose of finance management is to ensure that the program is completed within budget, and that the finances are managed in a way that is in accordance with the organization's rules for financial control.
Program managers are generally involved in financial management of the initiative starting from the initial pre-approval stages.
The first process under financial management is Establish Program Financial Framework. This process falls under the Initiating process group and is generally performed at the beginning of the lifecycle.
Connecting the phase, process group and the process, it would be the Program Initiation Phase, Initiating process group and the process falls under Financial management knowledge area.

The process Establish Program Financial Framework is about determining the funding sources for the program and creating a plan for managing funding flows and ensuring money is spent efficiently
A Program's financial framework varies according to the environmental factors in which the program operates. Common environmental factors that affect the financial framework of a program include cost, size, geography, industry and duration.

Improving Your Profitability Via Financial Management System

A good part of the success or the failure of a business has to do directly with how much profit the organization realizes from the sale of the products or services that the company provides to its customers. In order to maximize a company's profitability, it is very important to have a good and complete financial management system to handle the important aspects of money management.
One of the keys to a good business financial management structure is controlling the daily, weekly, monthly and yearly expenses of the operation. This comes down to simple math and cash management principles. Companies will not be profitable, and therefore won't stay in business long, if they spend more than is required to produce and deliver their product, and end up trimming their profit margin so that it is just too thin to make the business viable.
Keeping overhead expenses in check and making sure that the cash in the business is managed effectively through a financial management system will help make a company better able to compete in the marketplace. When expenses get too high, it is hard to compete effectively and a competing company can easily start luring away customers based on price.

One of the most important people involved in good business financial management is the treasurer of the board. He or she is typically charged with the responsibility to oversee the money management for a corporation. The person in this role should come to the job with a wealth of business cash management experience, a strong level of wisdom and a firm understanding of corporate financial management. With the treasurer strongly armed with these money management skills, the corporation stands a much better chance of being strong financially and being able to ride out the storms of business and economic challenges.
Another key person on the team that oversees the entire business financial management practices for a corporation is, of course, the accountant. It is the corporate accountant and his team, depending on the size of the company, that will deal with the minute and detailed money management for the company on a daily or sometimes hourly basis.
The accounting department of a company will keep the books for the organization, will generate the various financial statements that are required both by government agencies and by the board of directors, and will conduct the financial analysis of the financial reports. This is the department that is entrusted with managing and enforcing departmental budgets, which is such an essential part of financial management systems, and essentially handles and accounts for every penny that flows in and out of the business coffers.
Nowadays, with the ubiquitousness of computers at every level of business and commerce, there is no doubt that any company that takes advantage of a complete financial management system for their operation will also be using sophisticated money management software as well. Even though the people in the organization bring the expertise and knowledge to the task of business financial management, the software chosen to help them do their jobs is critically important and much be chosen only after careful research and comparisons, with regard to the options available.
369 Niches Rolled Up Into 1 Product
Turn any hobby into a business. Discover
24 totally unique business models.

What is the Importance of Financial Management in Your Business?

If you plan to go big with your business, you can never neglect the importance of Financial Management. It is an essential tool that is required to move ahead with your expansion plans. Generally, this critical aspect is disregarded because the entrepreneurs are unaware of its advantages and uses. Financial reports can help aid in making important future decisions. If you have a solo or micro business, then it is not imperative to make use of Financial Management. But as I mentioned earlier, if you plan to make it big in the world of business and commerce, you should make Financial Management your forte!
o Accounting and Financial Reports - It is very important to keep track of your company's origin and its past history, particularly an account of the money that has been spent. When you analyze the financial reports, you will be aware of all the spending and expenses accurately. The earnings from specific services, product lines and sales staff - all will come into clear focus once you have gone through the financial reports. This will help you to manage your expenses and marketing accordingly.
o Financial Ratios - These ratios gives you all the information that you need to know about your business. Moreover, it is very easy to calculate. This way you can compare your company's standard with others. Financial ratios are not essential but it can point out your faults.

o Research - A little bit of research on the expenses managed by other companies will help you manage yours better and your bottom line could increase. You might need to tweak the procedures, alter operations, streamline competencies or shake up the staff for a better performance. Analyzing the financial ratios will guide you towards the area you are most weak in so that you can develop a strategy to enhance the efficiency of your business.
o Financial Statements - All the patterns in your expenses are exposed with the help of Financial Statements. Sales Trends comes into attention whether impacted by the season, changing consumer taste or other factors. This helps you to manage your inventories better, staff levels and sales promotions. Variable expenses and unusual or unauthorized expenses can be monitored with the help of Financial Statements. This will aid you in occasions of theft, embezzlement or other questionable activity before the stakes become too high.
Economic highs and lows affect all companies and these periods of change is a test for all. Some stumble, some even fail and there are some who stand unscathed. But the economic growth of all companies is affected collectively. Sometimes the growth is totally unplanned and the expansion occurs due to some external factor which can range from landing a large account to just finding a great deal on a second location space. Always remember that without proper and concrete planning, no business can survive.
Financial planning and management is not only for reviewing the financial statements but also to be aware of your expenses and then manage them in such a way that they don't go waste. You can use it to fund your future realistic projects and help your business go big.

The Importance of Finance For Non-Financial Managers

There are companies who are willing to have their employees be enrolled in courses that can help them gain a better understanding of the different aspects of the business. In this way, they too can have a grasp of where other departments are coming from, especially during meetings with different departments. And there are actually courses that can help employees gain basic knowledge about different areas of the business. One example of this are courses on finance for non-financial managers. Non-financial managers can truly learn a lot from this kind of course, especially in terms of having a better understand of different financial concepts.
It can prove to be quite helpful for non-financial managers to have knowledge about finance and accounting, especially that these two areas are quite significant in any kind of business. Through a course on finance for non-financial managers, they would be able to better understand the different concepts of finance and accounting, and use the knowledge in these concepts to make better decisions for the company that involve finances. And it can be good to note that this kind of lessons is especially designed to help managers who do not have backgrounds in the fields of finance and accounting.

One can expect that while enrolled in this kind of course, one can be given a crash course on the basic concepts and terms involved in finance and accounting, including trial balancing, financial decision-making models, cash flows, fixed assets, depreciation, budgeting, and financial strategies. But there is no need to worry, especially those who do not have a basic knowledge of these terms and concepts because these courses are designed to be easily understandable by people who are quite new to the world of finance and accounting.
Finance for non-financial managers can be seen as a great way to improve the skills and abilities of non financial managers, especially if the company places much value on leadership that gets results. This kind of course can help equip non financial managers so they too can better understand what financial reports really mean.
Through having an understanding of reports made by accountants and financial experts, managers will be able to better interact during management meetings as they can now make comments that they believe would be helpful in improving the of work being delivered by accountants. In the same manner, they will also be able to foresee financial problems that might develop in the future, enabling them to develop control measures to so these problems can be avoided.

Financial Management and Budgeting in Business

Importance of Financial Management
Finance is a key functional area of business management. This area is commonly referred to as Financial Management. The term defines the achievement of key financial objectives by making investment and financial decisions. Essentially, it is the management of all the processes associated with the efficient acquisition and deployment of both short and long-term financial resources. Financial Management assists an organisation's management to reach its financial objectives such as the creation of wealth, solvency, liquidity, growth and return on investment achieved through a process of financial planning, control and decision-making.
Financial Control
Financial control consists of different strategies to manage finances necessary to achieve the primary purpose of every business; which is to earn profit. Budgets are the traditional financial control method and provide a measuring basis which performance can be assessed. By engaging in a yearly budgeting process a business can make plans and forecasts for the year ahead. Control action should be taken when actual performance appears not to be matching the outline of the budget. Therefore by monthly monitoring of expenses, controlling methods can be put into place when expenses becoming higher than figures stated in budget (such as spending cut backs or extra working hours). And by determining the reasons why figures do not match the yearly budget plan, a business can therefore make necessary plans for this not to occur in the future. Monthly monitoring of expenses is another example of a financial control. Such data includes cash balance, total wages costs and hours worked key sources of income, unusual or above budget expenditures.

Three Main Financial Statements
The 3 main financial statements necessary to analysis and improve on finance viability:
1) Balance sheet - 'A statement of financial position that shows the assets of a business and the claims on those assets'
2) Income Statement - 'A financial statement (also known as profit and loss account) that measures and reports the profit (or loss) the business has generated during a period.'
3) The cash flow statement - 'A statement that shows the sources and uses of cash for a period'
By analysing these three financial statements on a regular basis a business can proactively forecast problems or opportunities before they arise. The 3 main financial statements are also considered as financial controls as these statements are used to understand and interpret the financial conditions of a business as a means of management and control. The statements enable a business to set guidelines and policies that enable growth and business success. An annual Profit and Loss statement is considered the most important financial statement and UK businesses are legally required to lodge a Profit & Loss Account with Companies House. In regards to cash flow, cash inflows are payments for products or services and interest on savings and investments. Cash outflows are a combination of many things including purchasing stock, daily operating expenses, fixed assets and government taxes. A business is also required to produce a balance sheet annually for reporting purposes. It provides a report of assets or liabilities.
Budgeting and Budgetary Control
A budget as a qualified statement, for a defined period of time, which may include planned revenues, expenses, assets, liabilities and cash flows. It is a short-term plan of working towards financial objectives. There are several styles of budgeting, these styles include -
* Fixed - does not allow for variations
* Flexible - Adjusts or flexes
* Continuous or rolling - continually amended
* Zero-based - needs assessed
* Incremental - uses previous budget with increment
Budgets are necessary to provide a basis for control, helping identify short-term problems and promote forward thinking. However, there is a need for budgets to be adaptable if they become unrealistic due to sudden changes in the business environment. This is known as 'Flexing the Budget' (which simply means revising the budget).
A variance report is required to indicate whether performance is below or above the budgeted level. It is the difference between the budgeted level of costs and revenue and the actual levels of costs and revenues also referred to as variance analysis. Budgets can also have a behavioural effect motivating the management team and staff to achieve better performance and help promote forward thinking.
Effective Business Planning
A business plan is made up of many elements but no business plan is complete without this financial information. For business planning to be effective, the budget and the three main financial statements (Profit & Loss, Balance Sheet and the cash flow statement) must be taken into consideration. A financial statement is the core of a business plan as they are used to identify various business strategies. Financial planning is interlinked with all elements of a business plan. Five key strategic plans interlinked with a budget (plan); 1) establishing mission and objectives, 2) undertaking a position analysis, 3) identifying and assess the strategy options, 4) selecting strategic options, 5) perform, review and control. By taking all of these elements into considering, a business can create an effective business plan containing financial data and projections.

Leadership That Gets Results - Finance For Non-Financial Managers

Managers need to deal with several kinds of reports each day. And with all the different data they need to review, most non financial managers often feel perplexed at the mere sight of financial reports. To most non financial managers, fiscal reports speak their own language - a language that is quite unfamiliar to them. And without a strong finance background, they often find themselves overwhelmed with what these reports are showing. These conditions make learning finance for non-financial managers a must in any type of organization, especially if the organization places much value in a leadership that gets results.
It truly is vital for an organization that values leadership that gets results to have its non financial managers learn the financial side of things, in the same way that financial managers must also be aware of the other aspects of the organization other than their area. The good news is there are now several programs on finance for non-financial managers and they can prove to be quite helpful in making managers become aware of how the organizational finances can greatly impact the direction that their departments would take, and that of the organization as a whole.
Some might have the notion that courses on finance for non-financial managers are dreadfully boring. What these managers are not aware of are the different ways for one to get more knowledge in this area. There are of courses short courses on this topic, and there are also reading materials that managers can review at their own pace. There are also seminars and workshops that provide a more interactive form of learning.

Regardless of the form that the course is delivered, what is important is for participants to learn how to understand and speak the language of numbers. In this way, they can better relate to fiscal data they have to review everyday and they can better see how these can significantly impact the business decisions they make every single day. It is also important to have the program how and why fiscal decisions can significantly impact the organizational and operational goals and objectives.
It is quite important that organizational leaders and executive should not take finance for non-financial managers for granted. If they are after a leadership that gets results, this is something that they must support and they must encourage their people to learn more about it so they can start applying the valuable lessons to real world scenarios.

Core Small Business Skills - Financial Management

With research into Australian small business failures revealing that 90% of small business failures occurring as a result of a lack of key management skills, it pays small business owners and entrepreneurs to develop a core set of key management skills on which they can draw. Developing strong financial management skills is one of the core skills essential for the management and growth of any small business and entrepreneurs should learn to master these skills to ensure their ongoing viability and success.
Financial Responsibility
Many entrepreneurs abdicate responsibility for the financial management of their business to their accountants.This is a rookie mistake. As the business owner you must take responsibility and accountability for the management of your finances. For the planning, for the ongoing management and monitoring of the financial aspects of your business performance.
You are also responsible for learning to read and thoroughly understand the key financial reports. Work with your accountant to learn how to read each of the reports and to look for indicators as to your business's financial health.

Financial Planning
Financial planning and in particular forecasting is vital especially when it comes to managing capital and liquidity, because any shortfall for either will lead to the early demise of your business. You need to be continually looking ahead to determine your upcoming financial situation and to asses what needs to be done to meet those financial commitments.
Accounting System Management
The first core requirement is the ability to maintain an accounting system that is compliant with current taxation requirements, such as MYOB or Quickbooks. These systems provide a raft of automated processes including the delivery of key financial documents such as Balance Sheets, Income and Expense Statements and Cash Flow forecasts.
You need to be able to understand each business transaction and translate and record the details of each transaction into the accounting system. This information can then be used to generate your financial reports, and can also be used as the basis for your taxation returns.
Estimating and Pricing
Incorrectly estimating jobs or pricing your goods and services can be disastrous for your business. If you consistently charge less than it costs you to do the job, you will quickly run out of cash. While if you prices are too high you may just price yourself out of the market. Building your skills in estimating and pricing is paramount to the success of your operation and you should make yourself familiar with the various pricing models and learn to apply the model most appropriate to your situation.
Taxation Management
Taxation rules and regulations are a huge, constantly changing body of work, and it is best left to the experts in the field. However, that does not mean you don't have to build your own basic to intermediate body of knowledge. You need this to work effectively with your financial and taxation advisors. You need to know how to ask pertinent questions about the cause and effect of particular decisions and how they are declared for tax purposes, so that you can make informed tax management decisions.
You don't have to be a fully qualified bookkeeper or accountant, but it certainly pays to know and understand the accounts and financial elements of your enterprise. Work with your accountant and tax specialists to determine the most appropriate solutions in your particular situation but don't abdicate responsibility. Make sure you have them mentor your financial management skills along the way.
Karen L. Paiyo is an Australian Small Business Counsellor, supporting and nurturing the spirit of entrepreneurship in the Asia Pacific Region. Karen empowers small business owners by transferring to them the skills and expertise needed to help them take their business ideas from creative concept to profitable reality, faster and with less risk.

Take A Financial Management Course

Everyone is trying to be more frugal, more conservative and smart with their money. Even businesses are taking their budget more seriously and cutting out things which are not really necessities. For these reasons as well as others, financial managers have become in high demand in recent years. In order to properly maintain finances, one needs to apply specific management principles. This requires a lot of attention to detail, careful planning, and a good knowledge of monetary strategies, cash flow, and other complex processes and practices. Those who are running a large business, or just one with complicated finances will require the talents and training brought on board by a financial manager. Those who are trained through a financial management course can bring a lot to the table.
Financial managers usually have somewhat large tasks with stressful decisions to make. They will have the task of maximizing the companies wealth and properly distributing it as necessary to fulfill obligations, such as paying staff and other bills.
This individual will have to be well versed on the corporations activities to properly manage the task ahead of them, and they will need to be well educated and well founded with tools such as budgeting, management, accounting, risk management, reporting, accounting, and dealing with financial statements and tax preparation.

People who take this role will have to be disciplined, educated in the practices of financial management, and be well able to work under pressure and stress. They will also need to be able to take a leadership role and keep others on task who work under them, strategically assigning responsibilities as necessary. This is a job that is vastly important and requires a highly responsible and trustworthy
The appropriate skills for this job type can be gained through associates or bachelors degrees that are available at a number of institutions and even online colleges. Some will choose the online college because of its flexibility and convenience.
Not only can individuals with this type of degree work for businesses, but those who start their own business or enterprise could benefit from the knowledge they have gained, being more able to run their businesses effectively. Many individuals who are starting a small company will choose to at least take a few management courses or get an associates degree to help kick-start their career. Perhaps some will even choose to take a few classes to benefit their own personal finances. This is one area that we could all use a little more help in.
Finance is actually one of the most popular choices for those considering management degrees. This is a well paying job that is in high demand. While location, position, and experience will factor into ones salary, the average around the country is $75,000, not at all shabby. Many analysts and directors of finance will earn much more than this.
Financial analysts and managers play a crucial role in the financial market today, making predictions and giving advice concerning mergers and expansion projects. Getting a degree in financial management is sure to land you a steady comfortable job, and offer a lot of perks, helping you along even in your own personal life.

What is the Difference Between Financial Management and Book Keeping?

If you are one among those who relates finical management to book keeping then you need to re-think. In fact, there are many people who consider financial management similar to book keeping or often gets confused to differentiate between both of them. Perhaps, the difference between book keeping and financial management is a common inquiry among numerous sophomores who are eager to gain knowledge and have a career in the sphere of financial and business management. From an elementary perspective, the aspect of financial management is a massive arena, and much broader than that of conventional book keeping methodologies. It is true that most of the financial management programs incorporate the study and application of book keeping in their syllabi, but as a whole, the ins and outs, details of financial planning and management are monumental in quantity and relevance.
Generally, the book keeping procedure deals with the traditional methods of accountancy that primarily considers the debiting and crediting of various monetary transactions. On other hand, the different facets of financial management do not only deal with accountancy, but it even includes other core subjects such as economics, mathematics and commerce.

The procedure of bookkeeping is largely mechanical and often do not require any detail study. Instead of the analyzing, the bookkeeping majorly depends on the recording of the information. On other hand, FM once again also address to risk associated to business. Every business that has a well defined system or even a good cash flow can have a problem. Now through some tried and true methods of proper financial management problems like handling any sort of cash shortages can be prevented. The principles of management can at times help in preventing cash flow problems and deal with them more effectively.
Moreover, F.M as a whole can be broadly defined as the procedure of running the financial resources, including financial reporting, budgeting, risk management, and insurance for a business. In fact, it primarily refers on two key aspects - how you are really financing your business and how well you handle the money in the business. However, bookkeeping basically talks about the day to day operation of an accounting system. It majorly refers the recording of regular transactions within the suitable accounts. An accounting system defines the process of recognizing, evaluating, recording and talking about the financial information concerning the business. So, in simple words, the bookkeeping can also be considered as a subset of the accounting system.
Without doubt, financial management generally encompasses a number of crucial areas of business, but at same the business results are usually delivered in forms of reports. Consequently, talking in the present context both financial management and book keeping have their own role to play, but having a knowledge of both can always assure excellent employment in the market. Both of them are beneficial in terms of salary and also at context of job satisfaction.

The Importance of Financial Management

The present world is synonymous with consumerism; therefore, management of finances is often a difficult task. Individuals can spend their money on a wide range of products or services. Over-indulgence in such products can lead to high credit card bills. In many cases, individuals spend their money before earning it, which can lead to a fiscal crisis. At this point, a financial management book comes to the rescue.
Every individual dreams of becoming a millionaire, especially in a relatively short period of time. However, dreams are not enough, and you will have to demonstrate effective monetary management. A management book contains useful resources and tips on how to manage your money.
A finance management book will give you definite steps to optimize your income and prevent losses. By reading it, you can equip yourself with a definite road map toward economic independence.
An important strategy listed in a finance management book revolves around changing your mindset. As a consumer, you would have to curb spending and wisely invest the money that you earn. Your perception of money should change if you wish to become wealthy. Most financial management books list effective habits and strategies, and it will do you a load of good if you master these habits. You should be able to understand the cash flow and manage it effectively, so that your income is more than your expenditure.

Almost every individual stands a chance of benefiting from knowledge related to monetary management. Every individual and business has financial concerns and hence it is important to learn the nuances of finance.
Fiscal management can be a tricky issue, and hence a financial management book is very handy. Effective financial management should help curb stress related to finance. Financial management equips you to pay your bills on time, and simultaneously have a good social life. Some of these books have been written by experts in this field, giving great insight, depth and knowledge. Financial management books are worth the investment if you can learn and master the listed strategies.
An important financial management strategy is to limit purchasing products on credit. Effective management programs help you save money for future needs.
The first step in management is making a list of all the sources of income. Follow this by a list of all your monthly expenditures. If you still have money left after taking care of all your expenditures, then you would need to invest this money in an effective way. Having an emergency fund is a great way to tackle unexpected expenditures.
Financial management can help if you wish to have a healthy, post-retirement life and a nice vacation home. It also helps you to take care of your child's education, especially college fees.

Financial Management Software Secrets

Money is tight, times are hard, you have heard this constantly for the past couple of years and businesses in particular have suffered at the hands of the global economic downturn. Perhaps the poor economy as much as anything else has increased the importance companies now place on their financial teams and perhaps to a greater extent the financial management software that they employ. Is it really possible that something as basic as software could be the difference between success and failure in a recession?
It may be a little far-fetched to say that financial management software will determine how a company performs in any kind of market; however it is entirely reasonable to say that it can change the fortunes of a company. It is also fair to say that if used correctly it will provide a road map to how a business can avoid the worst of a difficult trading situation and perhaps even prosper in a recession. Of course not all financial management software is created equally and I'm not suggesting that a program created to manage a home budget will change the fortunes of a large business, what we are talking about here enterprise level software designed with business in mind. So how does it achieve all this?
Today programs are more than just accounting software and definitely about more than just managing a bank balance. Actually it is used to provide in depth information as a basis for key strategic business decisions, the reporting features that enterprise level financial software has means that it is an invaluable tool for any company involved in planning for the future, informing decision makers of the areas of business where savings can be made and how those savings can be made. It's not only about savings though, increasing profits is an area where the insights offered by the reports can prove invaluable, the combination of cutting costs, making savings and increasing margins the basis of how using financial management software can turn the failing business around to be a successful and lean operation. How to choose the right software is another matter entirely.

Enterprise level financial management software does more than just accounting, when choosing a program there are several factors that must be considered to get the right platform for the specific business conditions you operate in, to do this it should be:
  • Reliable; it is essential that the program has been proven over time.
  • Robust; the software should be strong enough not to break through input error.
  • Flexible; it should be able to manage the whole range of financial processes.
  • Simple; a smooth learning curve is helpful, user-friendly is essential.
  • Integration; it is a necessity for the software to integrate seamlessly with existing business applications.
  • Expandable; if necessary a modular program that can growl to a full suite of ERP applications is idea.
Although not exhaustive this is the very basics of what is required for a finance application to be good enough to guide your business strategies, anything less and the results would be misleading.
Cost effective financial management is not easy with finance teams having to achieve more in less time with less resources, the only way they can manage to do this is by utilising the best possible tools at their disposal. Financial management software can help them provide the proper reports for the best possible strategic business decisions to be made.

What Should I Look For in Personal Financial Management Software?

We often underestimate the importance of proper financial management and simply rely on the fact that our bank balance is still in the black; however, we are at a loss to explain where all of the money went. It's not unusual that many individuals are aghast when they look at their monthly bank statement and see that their paycheck deposit is gone through a series of many cleared checks. This situation can be unnerving to anyone, but if you are using personal financial management software, you can see at a glance what was spent, and what it did for you. It's not just about saving money and paying off your credit card bills, but the software should present strategies to maximize saving, eliminate debt, and give a true picture of your current net worth. In short, a financial management program is a highly detailed and complex system that is vital to keep track of spending as well as net worth.
The first thing that comes to mind when considering personal financial management software is the process of budgeting. The heart of proper financial management lies in budgeting, as it helps to keep track of spending and earnings, while at the same time, gives a view of your overall financial condition. These software programs are usually incorporated with one of these two types of budgeting methods: Retroactive or Proactive budgeting. The former one allows you to create your own budget, and it keeps track, after the fact, whether you followed your set budget or not. On the other hand, Proactive actually assists you to make a budget, and guides you through so that you can achieve these budgeted goals. In most cases, under this method, you are asked to keep aside some additional money for emergencies. This money that is set aside, allows the software to make financial recommendation with much more confidence and accuracy.

Budgeting is most certainly a very important aspect of good financial management, but it isn't the only one. Keeping track of your true net worth is also equally important. The budgeting process helps to keep track of our short and long term goals, and whether we achieved them. In order to properly track our net worth, we need to bring in the value of our bank accounts, stocks, bonds, real estate, etc., and update them regularly. The more complex personal financial management software systems have this process as well, and will give you an accurate picture of your financial position. This type of financial information can be key when it comes to making crucial financial decisions, or applying to your bank for financing. Also, in this fast paced and globalized world, many individuals tend to have more than one bank account, and often times, various financial interests, making the situation even more complex. Good personal financial management software will be able to track this and present an accurate picture.
In summary, budgeting and keeping an accurate track of your net worth are crucial when it comes to good financial management. When you are exploring options for effective personal financial management software, make sure the program is able to handle your current and future needs. In addition, a program that is relatively easy to use and presents the type of reports that you require, is a must.

Is a Lack of Financial Education the Reason for Poor Financial Management Decisions in America?

Americans study all of the essential things in school, algebra, science, history, languages and the arts. However, many people wonder why there may be a lack of financial management classes to learn basic financial planning strategies. Many students don't know the first thing about retirement, savings, credit cards, debt or even basic budgeting strategies. Although some might say this is something that should be taught by parents, today's parents are the byproduct of the credit card generation; therefore many parents only learned the cause and effect of their financial matters by trial and error.
It is not only the parents that are financially challenged. Even teachers lack the training because of an education system that lacks the teaching of fundamental skills needed to achieve fiscal responsibility. Some of those more savvy in the diligence of their finances may seek the services of a financial management advisor, however given today's economic turbulence, the very root of the problem has become apparent in our society's apparent financial illiteracy.
According to a recent survey, over 60% of all high school students failed certain questions about basic household financial management and were not given the proper role models for financial independence. Across the gamut, the media has highlighted examples of adults who have mismanaged their money, losing homes or severely damaging their credit by defaulting on their loan and credit card payments, as well as college students who default on student loans and many other examples. Even big businesses on Wall Street have gone bankrupt and the entire financial system of banking seems to be crumbling right before our very eyes. We expect our youth to learn about proper financial planning and financial management amid a society that has accepted financial failure as the norm?
Today's Financial Buzz attributes many of these economic problems not entirely to the fault of any one entity, enterprise, or government but instead to the theory that the need for financial management practices should be taught early on to our youth. By teaching everyone how to become financially literate, we could create a society of fiscal responsibility. Instead, it is becoming rare to see a young person who doesn't abuse credit by either racking up high debt, paying late or even bouncing their checking accounts time and time again by relying on unsafe measures, such as online banking. Some do learn these best practices in college through economics or financial courses, but those students are becoming far and few between.

Some critics say that in order to add any more mandatory courses to the education system would require dropping some other important classes. Other say that the public school system is not supposed to be a lesson in life training manual and that those types of learning exercises should be enforced by parents. However, there are two sides to every coin and with many parents now in deep financial troubles themselves, they may not be the best role models for kids to follow. Foreclosures have reached an all-time high while stocks and securities have reached an all-time low, indicating a big problem with the entire system of financial management and not just a few sprinkled examples here and there.

Courses on Finance For Non-Financial Managers

One important thing the executives and managers should understand is that finance and accounting is not just for people who always take calculators with them, it is also for non-financial managers as well. It helps to learn more about finance for non-financial managers because the financial status of the company can tell much about how the business is performing in relation to the vision, goals, and objectives that have been set.
Through a course on finance for non-financial managers, executives and managers will be able to learn how they can integrate financial policies and concepts into management decision-making process, as well as in the budgeting process. They will also be able to learn how to evaluate the financial feasibility of projects and activities with the help of balance sheets and income statements. They will also be able to learn how to use cash flows in analyzing the status of the business, determine and calculate the cost of different business activities, better control business operations by effectively managing the budget, and communicate effectively with the different executives and staff of the company who are directly involved with business finances.
One of the biggest benefits of a course on finance for managers, who are not directly involved with financial matters, is that they will be able to better oversee or supervise budgets allocated for different departments. They will be able to learn more about the basic financial principles used in the budgeting process - and this plays a significant role in becoming a successful non-financial manager. It is advantage for non-financial managers to be able to understand finance and accounting concepts so they can translate them into terms used in decision-making (which they pretty much do everyday).

Non-financial managers and practically anyone who wants to develop his or her knowledge in financial practices can attend a course on finance for non-financial managers. In this manner, they will be able to have better chances at improving their managerial skills.
A course on finance for non-financial managers can vary, depending on who or which institution is giving lectures, discussions, and activities regarding business and finance concepts and policies. Oftentimes, these courses allow participants to gain experience in analyzing and developing balance sheets, cash flow statements, and income statements. At other times, they can teach participants how they can establish and manage realistic operating budgets, as well as applying financial concepts and principles to different situations in the real world.

Financial Management - Things All Business Owners Should Know to Succeed

Statistics show that 87% of small business failures are due to one reason: Lack of proper financial management skills! This is a horrible statistic and it can easily be turned around for you! The formal definition of financial management is "the planning, directing, monitoring, organizing and controlling of the monetary resources of an organisation." Basically; do you understand, track and control where and when your cash flows in or out of your business.
I have seen evidence of this statistic over and over again. There are so many small business owners out there that pay a fortune every year for their financial statements to be prepared by their accountant, and have very little understanding of what this document actually means. No sooner have they written out the cheque (with a very heavy heart) to their accountant, and the next cheque is on its way out -to the tax man!!!
Financial Management is not something you only worry about after year end, when you need to report to the tax man. Its a process of understanding and tracking how your business is performing on at least a monthly basis. Some business' require a more frequent review depending on its size or even how desperately the business needs it. To prevent you from becoming part of this 87%, I have formulated a few DIY tips in my report so make sure you sign up for it before you go!

It is designed specifically for you (the local business person with little or no understanding of financial numbers or processes) and you can use them to gain an understanding and eventually confidence in your business today, and tomorrow...... your business' future. You can also sign up for our DIY templates package to get you started "understanding, tracking and controlling" your business. Be part of our database and you will be able to get started "number crunching" the Turnover you desire - and qualify for 30 minutes extra expert time for FREE.
Financial management is a big part of a running a business and it's likely to determine your long term success.
Every business owner should have a strong skill in the area of financial management. If not, it is important to have someone on your team who is a specialist. You should take on financial management with great focus and importantly, take into account the strategies and plans that offer growth, stability, as well as continuous profit for the business. Managing your finances will always involve some risks but these can be reduced with the assistance of experts like the team from "Confident Cashflows."
Don't become an all to common statistic!
You can learn and understand the basics of financial management, but as a business owner, it doesn't mean that you need to know everything. It is your role to steer the ship and have an understanding of what is going on in the engine room is critical.
Sign up for our "Financial Health Check" which can help you truly understand how "healthy" or how "not-so-healthy" your business is. Don't wait - tomorrow may be too late!
Regardless of what specific tools you adapt for managing your finances, you will certainly be on the right track if you consider a team of financial experts who can help and guide you well on how to handle your finances.
Benefits of working with financial experts
  • Financial experts let you focus on your technical and operational expertise of your business - but help identify potential stumbling blocks along the way - BEFORE your business falls down!!
  • Financial management experts help you employ BIG business principles to small(er) business enterprises. Remember you will never be able to handle BIG profits if you cannot manage smaller profits NOW!
  • Financial experts give you advice based on your specific industry and your specific business. Every business is unique - with its own strengths and unfortunately its own weakness'. Without the knowledge of where you stand - it's very difficult for you to make informed decisions about your business' future!
The key to success is always a solid foundation and knowing your goals and more than anything else, choosing the best financial management experts to help you reach your financial goals and run your business effectively.

Project Financial Management - 10 Key Steps to Streamline Your Business

Over the past decade or so we have been constantly bombarded with news about private and public projects that have either delivered scope at well over the expected budget or had to reduce scope to even come near to the original budget. Current thinking within project management methodologies only discuss the financial aspects of a project at a high level, leaving the "student" without any real way of working to greater understand the impact of their decisions on the financial results of the programme. In turn, the business case development is usually given minimal time and is a rushed job in the end. Investing in the correct people and time up front to review feasibility and secondly the business case is a must to ensure the total on target delivery of a project.
In the financial climate we are in, where budgets and costs are being cut, the time is now to ensure that whatever funding a company has available, that they invest it wisely - to do that you need to ensure that the project in the end - budget, costs and benefits are comprehensively reviewed.
With this in mind - using the Pathfinder Project Management Methodology as a basis, below are the 10 key steps to successful project financial management
(1) On new projects - invest time creating accurate feasibility studies and business cases, if this is a rushed job - in the end the results will deliver overspends.

(2) Review your project portfolio - are you carrying out the correct projects, are they nice to haves, are they being done for internal political gain - ensure each business case is robust and adds value to the future of the firm - spend time using previous experienced individuals to review and re-review the business case.
(3) Concentrate reviews just as hard on the benefits as the cost. In 80% of projects, once they are in, nobody wants to go back and review if they delivered as promised. So ensure from the start of the project you continuously check that as well as costs being on budget, that changes to your project have not altered your benefits.
(4) Cost cutting is not always the answer - allocate resource to "added value" projects - in today's world cutting heads is a an easy short term fix, do not throw out the baby with the bath water and leave the firm with projects in-flight with no experience to deliver them. Instead review your project spend and as in (2) concentrate on adding value.
(5) Workforce development - up-skill their financial management knowledge, develop staff in leadership, health and safety, motivation etc - so when you put a non-finance manager in charge of a large project, is it not about time they were given the financial know-how. Don't leave financial management to chance - develop your workforce.
(6) Break down the project into financially manageable sections. Too many projects work on the basis of a "pot of cash" - spend it as per the budget and if luck is with them, great! Instead take the "pot" and break it down into manageable sections - mapped to your project structure, that way you can see where budgets are by "workstream" and what ones are over/underspending.
(7) "one point of contact accounting" - too many managers will lead to budget overspend - following on from (6) above - The overall programme manager is responsible for the budget in total, at the same time each head of the projects parts should then be responsible for managing their part of the budget. This leads to one finance manager dealing with one project manager, ensuring a consistent relationship.
(8) Deliver focused and meaningful financial reporting to enable accurate decision-making. More is less - agree on what reporting is required from the project at the start and continuously improve until it is what the project needs to manage the programme of work. Because an accountant can deliver 20 pages of analysis a month to each project manager it does not mean that it's correct - save the trees - minimise the reporting and improve the decision making.
(9) Communication - have a strong relationship between your project and finance manager. Finance cannot be back office, they need to be part of the project team and be seen to be so, and therefore open and honest communication channels lead to no surprises.
(10) Finance should be made aware of all potential risks / issues and a probable cost - if a problem has or may arise warn finance early, finance will be limited to what they can do to assist "after the event".

Financial Management Programs

Financial management is one of the most important things you should learn if you wish to venture into any kind of business. It involves financial decisions, techniques on how to ensure high profit, as well as the tools and the methods of analyses in order to come up with sound decisions.
Starting a business and making it grow, as we all know, is not an easy task--even if you have all the financial resources you need for your business to thrive. Remember that your money is just a tool for a successful business. What really determines your success are your skills in handling your money and all other your skills in making decisions.
If you are new to business, don't worry because there are literally hundreds of financial management software programs available today. The right one can help you make accurate and objective decisions regarding your finances. Financial management programs can help you take care of cash management, accounting, payroll reporting, check preparation, financial risk management, and others with ease and convenience.
There are several kinds of financial management programs, and each kind has its own features, advantages, and disadvantages. It is important to choose one that truly fits your needs. It is not enough to get one that can make work easier for you - you need one that can help you optimize your profit.
You can check reviews on each product before you narrow down your choice to one. Compare their features as well as their prices before you choose a particular program.
Financial management programs do calculations automatically for you, so you don't have to worry about having to deal with too much numbers. It is advisable to choose programs with basic features first if you are starting a small business. If you find it hard to budget your finances and plan your business, you can choose programs with budgeting features.

Advanced financial management programs aid in billing as well as preparation of payrolls and invoices. Look for these added features if you think you need them. Furthermore, if you are more oriented toward visuals, choose programs that make use of graphs and charts, as these probably will be easier for you to use.
Like any other decision you are going to make in business, deciding which programs to use can trigger a chain reaction, so be very careful and do not decide too quickly. It may sound as simple as deciding what to wear for a formal gathering, but financial management programs are not like a tuxedo - they can give your business long-term solvency, not just a good first impression.

Cruising For a Bruising - Or Time For a Financial Management Course

Perhaps you're starting to feel comfortable again. The markets have been steadily recovering. The Dow has risen over 50% since its lows back in March 2009. The ASX has also performed in a similar fashion. Who needs a financial management course when you're cruising? But is it going to last? There seems to be conflicting views about the recovery. People are still losing their jobs. Banks are still writing off bad debts or making provisions for new ones and governments around the world are still printing money to meet interest repayments or keep their economies afloat. Many 'experts' believe this could just be the calm before the storm and that the Dow could retreat to new lows. Scary stuff.
Does that make you nervous about your investment portfolio or retirement savings? It should do. If you have retired or nearing retirement, the last thing you want now is to take another hit, which you may never recover from. And what about your financial adviser - have they reviewed or changed your portfolio since it went south?
Chances are your financial adviser has left it untouched because the thought of crystallising losses on some of those managed or mutual funds you hold would be too unpalatable to consider. It's likely too that you have funds locked up in a frozen property fund, which still resembles a losing boxer on fight night.

If you want to sleep better at night, the time has come to take control of your finances through a financial management course. Given you don't have the skill and experience of your financial adviser about investments, risks, asset allocation and all those other financial terms they throw at you , then the only way you can take control is to educate yourself through a proper financial management course.
Financial Advisers follow traditional asset allocation models and use traditional and popular managed or mutual funds. Many of these traditional global funds still invest in US or European companies. Is this really the path you should be going down? The global financial world is heading down a new track and you need to get onboard if you want to avoid another bruising.
How many international managed or mutual funds do you have in your investment portfolio? What percentage of them still invests in US or European companies? Where do you think the growth is going to be over the next 5, 10 or 20 years? US or China? UK or India?
This is the reason you need a financial management course. Your financial adviser is stuck with recommending to you the traditional investments and managed funds that follow traditional asset allocations. To survive you need to keep ahead of the times, and understand where the growth economies of the future are going to be. You need a financial management course that teaches you the foundations of financial education and gives you the power and confidence to sack your adviser and take control of your own future and finances. You need expert, independent, unbiased and up to date information and education about the economic times ahead, opportunities to look for and what markets to invest in.
Don't risk the future of your investments. Visit my website below for a list of financial management courses available that can give you the skills and knowledge needed to survive and prosper in the times ahead.

Easing Your Money Management Using Financial Management Software

Good business financial management principles are some of the most important and foundational things that you can learn if you are planning to take the plunge into owning and operating your own business, either now or at some point in the future. Along with a sound understanding of these principles and acquiring solid money management skills, you should also make full use of the business related, financial management software that is available these days.
When business owners, managers and accounting personnel make financial decisions for a business, it is important that they have the most complete, organized and accurate business financial management reports that are available. It is also important that these reports are as up-to-the minute and current as possible, especially in today's volatile economic climate, and good a good software program in financial management is the best way to generate these kinds of reports.
Financial management software often comes in suites or bundles of programs or modules, which are designed to work together to manage the data needed for professional accounting practices for the business. These modules include a variety of financial management tools that can generate the reports for the management of the business, as well as being able to easily handle the calculation of taxes.

The software packages that are available today for business finance money management are typically "all in one" solutions that include many modules for different aspects of business accounting. These various modules all work together and are designed to easily share information so that financial data only needs to be entered into the system once. This reduces the chance of errors that are often created when data has to be reentered numerous times.
Money management for businesses, whether small home-based businesses or large corporations, all come down to the same principles, so these software programs are essentially the same regardless of the size of the business. In most instances, the primary differences in software for business financial management for small business, as opposed to those for corporate financial management, is the potential limitation on the size of the database, the number of users who are allowed to access the software, and the networking capabilities of the program.
However, the basic functions of any good money management software program will include all of the basic accounting functions. In addition, there are personal money management software solutions on the market as well, which allow the user to have more control and better insights into their personal financial situation and which can also prepare personal tax reports and forms. This level of software can often be very effective for the person who is starting up a small home business.
The larger financial management software packages for businesses will also have modules that can handle all aspects of payroll, cash management account needs, check preparation and generation, and financial risk assessment and management. Because the money management for a company is so crucial to its success, it is important to spend sufficient time comparing the different options available, as well as making sure the software publisher is reliable and reputable.
369 Niches Rolled Up Into 1 Product
Turn any hobby into a business. Discover
24 totally unique business models.

Financial Managers - Are You Interested in a Financial Management Job?

Financial managers are present in about every industry and firm whether public or private, and they are responsible for preparing financial reports and managing the investment activities of the corporation. They may also go by the titles controller, credit manager, insurance manager, or finance officer.
Controllers are responsible for preparing financial reports and statements and earnings, and finance officers are responsible for managing the budget of the corporation. Credit managers are responsible for managing a corporation's credit and maintaining or improving a credit rating and determining debt ceilings.
Cash managers are responsible for controlling and monitoring the amount of cash that goes in and out of the business every month, and insurance managers are responsible for minimizing the risks that an individual or corporation will take during its business operations.
The most common areas of employment of financial managers are usually institutions such as banks and investment firms, and the role of finance management can be highly specialized in the case of larger institutions or cover most of a firm's operations in much smaller businesses.

Most financial managers will work in comfortable office settings working on new computers, and they may work long hours, which can include 60 hours a week. They may also have to travel in order to visit customers or clients. Managers will usually require a bachelor's degree in order to compete in competitive financial firms, although some first start out as loan officers and work their way up to a higher position.
In 2006, financial managers held over 500,000 jobs in America, with about 30% employed in the financial sector and the rest working for commercial businesses or Federal or state governments. Job prospects overall for financial managers will keep pace with the average rate of population growth in the country.
In 2006, financial managers in the middle fiftieth percentile of earnings made between $67,000 and $125,000. Larger firms will offer higher salaries and generous benefit packages, which can include stock bonuses and additional forms of compensation, while smaller firms will usually provide less in the way of benefits

Finance Management Courses - Why Financial Management is a Popular Program

Finance management or financial management is that aspect of management which involves the application of general management principles to specific financial operations. It basically entails planning within a business enterprise to ensure a positive cash flow and maximize shareholder wealth. Financial management includes a large number of complex practices and processes, including the administration and maintenance of financial aspects and identifying and managing risks.
The decisions that financial managers need to make are in regard to financing, investments, payouts of dividends, and working capital management. They generally encounter difficulties in the form of measurement problems, uncertainty, and temporal spread. Financial managers need to be conversant with the tools and concepts of financial management, such as capital budgeting, sources of finance, various types of financial statements, financial accounting, financial reporting, and risk management.
Managerial or corporate finance is the task of providing funds for a corporation's activities. Its goal is the maximization of the company's wealth and the value of its stock, while balancing risk and profitability. People entrusted with the financial management of corporations must be sound in the practices of financial management if they are run an organization successfully.
Given the importance of financial managers in today's business environment, it is not surprising that a wide variety of courses from the full-time MBA to the online courses abound.

Finance is perhaps the most popular choice for candidates seeking management degrees. The role of the financial manager is to oversee the generation of financial analysis and reports to help with the company's decision making, business development, and more importantly, strategic planning. The job of the financial analyst is to use these tools and devices to shape the company's investments and business growth. Financial analysts and managers today play a crucial role in effecting mergers and global financing and expansion.
If you are looking for a role in finance in a medium to large corporation, the degree program is what you will need to look at, given the complexities of financial management in large corporations. When choosing a program, remember that with finance and management degrees, the institute that you pick must be reputable and recognized in the field. Accreditation bodies exist specifically for MBA programs to oversee the consistency and quality of business education, so it is preferable for a student to select a program that is accredited.
If however, you are already running your own small or medium enterprise or non-profit organization, and need to apply the tools of financial management to run your organization more effectively, you can opt for the shorter courses or the online programs offered by the many institutes.
Several MBA programs offer tailor-made courses that could be full-time, part-time, and distance learning courses with specialized concentrations. Accelerated MBA programs involve a higher course load and more intense and examination schedules. Part-time courses are another option, with classes being held in evenings, after normal working hours, or on weekends. Executive MBA programs are developed to meet the training needs of full-time managers and executives, allowing them to earn their degrees without compromising their jobs.
From this spectrum of financial management courses, there is truly one for each one to enhance our own financial management skills and take our enterprises to the cutting edge!

12 Areas to Include in Your Financial Management Operations Manual

From a process perspective, Financial Management is the easiest and simplest business process to take care of no matter what business you're in. But it's often the most avoided and neglected area of any business. So why is that? Well, in my experience it often comes down to our fears around money.
The best way to tackle fear is by using knowledge. Not avoidance. I work with many clients who at first will try their absolute best to avoid looking at their numbers, or not paying attention to it, in the hope that it will go away. But unless we know where you're at right now, there's no way we can improve it. This is where putting together a financial management process and documenting this in a financial management operations manual can be of huge benefit both to yourself as a business owner and to your business!
The type of Financial Management process that I take clients through is a method that I devised because I was probably way behind where you are now. It comes down to understanding some simple systems that you can then enhance to build your very own financial management process. Then putting that knowledge into a financial management operations manual so that your financial records are maintained in a consistent manner that you can get the information you want.

I have to be very clear with you here. I am not an accountant. My understanding of financial management comes from learning the hard way - by it costing me a fortune to NOT know. So over time, I developed my financial know-how and then devised systems and procedures to help me to be able to better manage my business finances.
And by the way, I have always had great financial people on my team. But they are made great by the fact that I have a system that they follow. This ensures that my data is recorded in a consistent manner, and that I've got my finger on the pulse of my business by having all the right reports available at the right time.
Here's a quick high level checklist of what should be included in putting together your financial management process and operations manual:
1. ACCOUNTING ROLES: Clearly indicate who's responsible for your money in your financial management operations manual. Understand the different roles of people who are doing the numbers in your business. Be clear about the difference between a bookkeeper and an accountant or financial manager and how each can benefit your business in the most cost effective way. Then put together job descriptions outlining who is responsible for what and how they interlink (or you can purchase complete job descriptions for your bookkeeper and financial controller at our website).
2. FINANCIAL REPORTS: Work out what reports you require to keep your finger on the pulse of your business - and then insist on receiving them on a weekly, fortnightly or monthly basis. Outline in your operations manual who is responsible for delivering these (this should be outlined in the job descriptions also!) and at what regularity. These reports should form the cornerstone of your business decisions. You can never have too much information.
3. YOUR ACCOUNTING SYSTEM: Many people rely on their bookkeeper or accountant to tell them what the best accounting system is to use. But don't just take this information at face value. Investing in an accounting system is a big investment over time. Research the initial investment cost of any recommended system, as well as the continual costs to upgrade the system from year to year. Also consider how many bookkeepers are trained in this system. There is no point is purchasing an accounting system that is cheap as chips if there is no-one able to use it. This will just result in paying top dollar for a specialized bookkeeper and potentially more costs down the track to convert over to a less specialized system!
4. PROFIT AND LOSS PROJECTIONS: Every year prior to the end of your financial year, you should be putting together a profit and loss projection of what you want your business to be doing. This provides you with important "what if" scenario planning. It's always better to know whether something is going to financially work before you embark on it!
5. BUDGETING: Budgets are the most known about and yet least used thing in most businesses. You should have an annual budget that has been derived from your Profit and Loss Projection then broken down into specific areas in your business. It also assists people (including your bookkeeper) in your business to know exactly what they can spend and what they can't. It's also an idea to ask your bookkeeper to enter the budget into your accounting system so that you can incorporate your budget into your Projected Versus Actual reports.
6. CASH FLOW ANALYSIS: I often get asked why a business is making a profit, but there's never any money to spend. This is because there is a difference between cash flow and profit. It is essential that you ask for a cash flow analysis each month at a minimum - weekly would be better! This ensures that you have enough money in your bank to pay people when money is due, and allows you to chase up faster those that owe you money.
7. CONTROLLING COSTS: To control costs in your business you should have a purchasing system in place. Ensure that not a dollar is spent in your business without a purchase order and incorporate this into your company policy document. Every bookkeeper I've ever known baulks at this idea because it's extra work for them. But at the end of the day, it keeps control over your money. With this system in place you will never have unexpected expenses arise that an employee has kindly organised for you.
8. ACCOUNTS PAYABLE: Outline and record in your financial management operations manual how your accounts are paid including the method and timeline. Also include any regular payments including direct debits, as well as other spending methods such as store cards or credit cards. Another tip is to include your petty cash system and employee (and director) expense reimbursement systems.
9. ACCOUNTS RECEIVABLE: Often business owners think that it's common sense for a bookkeeper to know what to do in accounts receivable. But never for one moment think that your common sense is the same as your employees! Ensure that your financial management operations manual includes an overview of the system for dispensing goods and/or services, your credit terms, how to raise invoices and how to follow up on outstanding payments. I also encourage clients to include phone scripts on debt collecting in their operations manual so that there is no doubt as to how to handle clients. Nothing annoys a good client more than an accounts person chasing them for money and conversely, nothing annoys a business owner more than an accounts person who can't get a definite payment date!
10. BANK ACCOUNTS: Make sure that your financial management operations manual includes an outline of bank accounts, including GST accounts and who credit cards are issued to. Also include an overview of online payment systems. However NEVER include details on your PIN numbers. This should be divulged in person and never written down.
11. Other things to include in your financial management operations manual should include items such as Fixed Asset Register, Insurances, Depreciation Registers and End of Year Procedures. Although these are generally covered by your accountant at the end of the year, it should also be included in your financial management operations manual so that your bookkeeper and/or financial controller know what steps to take to prepare the information for your accountant.
12. DATA BACKUPS: Your money records are THE most important records in your business. Ensure that your bookkeeper is saving your records to a device that is stored externally to the computer. Include information on how to back up to this device in your financial management operations manual.