planning and implementing Flashcards
Order of Planning and Implementing
- Determining financial needs
- Developing budgets
- Maintaining record systems
- Identifying financial risks
- Establishing financial controls
Determining financial needs (What do businesses need money for?)
- Growth (expansion)
- Employees
- Investment in technology/machinery
Why do businesses develop budgets?
Budgets are used to measure planned performance against actual performance, controlling expenditure
- Forcast expenses
- Predicts level on profitability
What are the types of budgets?
- Operational budgets
- Project budgets
- Financial budgets
What is an operational budget?
Forcasts day to day expenses (i.e production)
What is a project budget?
Budgets concerning investments in specific projects (i.e. R&D)
What is a financial budget?
Inflows and expenses predicted during a trading/time period
Maintaining record systems
Online or manual system recording business inflows and outflows
What are record systems needed for?
- Tax purposes
- To review levels of inflows and outflows
- Monitor budgets (under/over spending)
What are the types of financial risks?
- Market risks
- Credit risks
- Financial risks
What are market risks?
Risks that pertain to cyclical changes in the business cycle
- Demand levels
- Booms/Busts
- Int. rates
What are credit risks?
- Availability of funds
- High risk concerning payment
What are financial risks?
- Liquidity and solvency issues affecting your ability to repay debt
What is establishing financial controls?
Establishing systems to prevent unnecessary spending.
- Approval processes for spending
- Debt collection procedures
