September 2018 Apprenticeship Issue Business SCAN
Effective financial management is the foundation of every successful business – all managers and leaders should be well versed in this area. Exploring this core unit on organisational financial management will equip you with the knowledge and skills you need to understand financial systems and controls, and the impact of external factors on organisational management.
This technique describes the purposes and uses of budgets in organisations and identifies stages of the ‘traditional’ budgeting process. It also describes some of the benefits of effective budgeting and assesses some of its limitations.
The budgeting process can be defined as a systematic business activity that encompasses the development, implementation and evaluation of a plan for the provision of services and capital assets including fixed resources, such as money or time, during a given period to achieve desired financial targets (Tracy, 2008). In other words, budgeting process is the allocation of capital which is then used in the proper way to achieve the set or designated targets of the firm.
Financial Planning and Forecasting
The technique explains the structured methodology that allows organisations to evaluate future financial needs. It also reviews how this technique is used to assess the amount of cash the company requires if a project develops more quickly or slowly than expected.
Financial Forecasting uses a set of techniques to determine the amount of additional financing a company will, or may, require in the future (Moyer et al., 2008). It can also be a useful approach for assessing a new venture’s profitability (Longenecker et al., 2005). Methods employed include, but are not limited to, assumptions, expectations, scenarios, sales percentage, and in addition there are more mathematical analytic methodologies, such as financial ratio based or regression analysis based forecasting.
Read these techniques to develop your knowledge in financial management.
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